NEW DELHI: With the rupee touching new low levels of 60 against the US dollar on Thursday, the Indian middle-class dream is crumbling fast.
Thanks to the sinking rupee, the middle class has been forced to cut back on their expenses by 15-20 percent to manage their household budgets, says a new survey by the Associated Chambers of Commerce and Industry of India (ASSOCHAM).
Conducted in major city centres across India such as Delhi-NCR, Mumbai, Kolkata, Chennai, Ahmedabad, Hyderabad, Pune, Chandigarh and Dehradun, the survey found that the rupee depreciation has impacted people the most in metros and other major cities.
Over 92 percent respondents in metros and major cities said their monthly bills have jumped by 15-20 percent during the last one month. “The middle class and the lower class are the worst hit,’’ the survey said.
Over 78 percent middle-class people say they have cut down on eating out.
And 65 percent people say they have reduced spending on foreign brands.
As many as 77 percent middle-class Indian say they have reduced foreign vacations. “The air fares are going up, the foreign stay will be costlier by at least 15-20% while shopping can become expensive by 12-15 percent. There are certainly some changes in travel patterns’ as majority of them are opting for non-dollar destinations such as Sri Lanka, Dubai, Bali and Phuket or sticking to domestic destinations such as Kashmir, Kerala and Goa,’’ says the survey.
The survey reveals that 49 percent people are cutting down spending on household appliances. In addition, 44 percent say they are reducing spending on home and personal electronics and 32 percent on cars and autos.
Since the rupee has fallen more than 15 percent since March 2012, Indian students studying abroad are the worst sufferers as they have to pay so much more for their expenses abroad now.
The survey report comes amid the rupee further sinking to 60 against the dollar on Thursday as the US Fed planned to end the monetary stimulus. As a result, the US dollar is likely to strength. Which is not good news for the already sinking rupee.
According to ASSOCHAM secretary general D S Rawat, “`Despite the effort by the government to control gold imports, the Indian middle income group is bound by societal traditions and continues to buy gold even at higher prices which have increased the prices of gold due to rupee weakening.’’
Consumers’ growing unease is reflected in their saving and spending habits, with many middle and lower income groups indicating that they are finding ways to cut back spending now or indicating they will do so in the future, said Rawat.