DARE - Because Entrepreneurs Do

Take home salary of average employee in metros and large townships has gone down 30% in last ten years which used to be over 70% around 1999 and now stands around 40% due to increasing  burden of EMI’s on housing, auto & luxurious items and life insurance premia, reveals the ASSOCHAM survey.

The sectors in which pinch of EMI’s is most painful include IT, Automobile, Hospitality, Civil Aviation, Manufacturing, Gems and Jewellery, Textile etc  further reveals the survey conducted under ages of ASSOCHAM Social Development Foundation (ASDF) in which over 5,000 employees took part.

The survey was conducted in a period of three months beginning March to May 2009 in major places like Delhi, Mumbai, Kolkata, Chennai, Ahmedabad, Hyderabd, Pune, Chandigarh, Dehradun etc. A little over 500 employee were selected from each city on an average.

Releasing finding of the Survey, Secretary General, D S Rawat said, “In an average salaries structure of Rs. 25,000/- per month , the take home part is not more than Rs. 10,000/- as average employee sells out over Rs. 6,000 on housing loan, 5,000 loan on cars/ auto, Rs. 1,500/ - on luxuries item.”

The share of Insurance premia is over Rs. 2,500 each month as employees need to ensure themselves including their families as there social security net in it, pointed out Rawat, quoting finding of the survey.

In addition, more than 30% of employees surveyed by ASSOCHAM said that they sell out between Rs. 4,000 to 5,000 in honoring the office loan advance on various petty activities such as construction, on education, marriage in relation etc.

However, 50% of the respondents said that their take home currently is not more than 40% of their total package and left over amount of 10,000 is spent for food, commuting costs, utilities, doctor  and education bills, disclose the survey.

In the last 9 years, the salary of common man has gone up by 30% but on the other side the take home salary has come down by as many percentage points. The Private employees are the major obligators of monthly installment.

80% of the respondent mentioned that median home price in the largest metropolitan areas have increased by 100% and the owner would need to earn double the home price to afford it i.e the owner have to pay 30% of the income to the home loan. The increase in home prices has not been matched by an increase in salaries.

70% of the respondent said that the premium insurance cannot afford to skip due to policy cover will cease to exist. The current scenario is to borrow money or cut down the costs but continue paying your term insurance policy premium.

42% said that they borrow within their means and thus even after paying the EMI rate of 40-50 per cent of income.  Such are worst hit by interest rate rise since they have no choice but to cut down on expenditure and thus lifestyle when EMI’s increase. They cut down on other costs less frequent eating out, smaller mobile bills, avoiding impulsive shopping and fewer vacations.

The worst hit is the middle class. Panic and depression have gripped home-loan borrowers among them particularly. The median household income has risen from 10,000 in 2000 to 25,000 in 2009, according to data.

In metropolitan cities, both couple work, together earning about 35,000 with a take-home pay of roughly 20,000 a month after taxes and some deductions for EMI, medical insurance etc.

60% of other Double Income No Kid couples who don't have any budget but use a substantial part of their income for loan repayment like EMIs add up to over Rs 20,000 a month for home, car/auto and spend about Rs 3,000-5,000 on luxry items.

85% of the respondent belonging to the middle class spent on EMI’s for basic necessities home loan , education loan, insurance premia toward the future of their children as their top priorities, followed by lifestyle goods.

65% of Single working professional quoted that working in a private firm in metro and buying a flat is difficult. They prefer to live on rent for a quarter of what they would have to pay as EMI.  As 40% of the respondent prefer to increase the tenure rather than the EMI, it will not affect your monthly outgo.

Source: ASSOCHAM

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