The economic slowdown and the worldwide coronavirus outbreak is impacting the general mood of the people as nearly half the households in the country plan to reduce discretionary spending during the March-June period. About 45 percent of the households plan to reduce discretionary spending, which includes eating out, movies, luxury products, confectionery, fashion, etc, according to the bi-annual Mood of the Consumer 2020 survey by social media platform LocalCircles.

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Of the 45 percent survey respondents planning to cut costs, 9 percent said that they would reduce their discretionary spending by over 75 percent over the next four months. Ten percent said that they would cut expenses between 50 and 75 percent; 11 percent between 25 and 50 percent; and 15 percent planned to reduce their discretionary expenditure up to 25 percent.

However, there are households willing to spend more notwithstanding the life-threatening virus scare and the economic downturn in the country. Three percent were planning to increase spending by over 25 percent, while the same percentage of households said that they would hike their discretionary spending by up to 25 percent.

About 37 percent of the respondents said that they were unlikely to make any changes to their spending pattern, while 12 percent were unsure about it, according to the survey.

No plans for a major purchase

Further, 49 percent of the households said they would not make any purchase of Rs 25,000 or above during the period. Of those willing to spend, 16 percent claimed they will do it on travel, 7 percent on their home or property, 6 percent on automobile, 3 percent on white goods (AC, refrigerator, etc.) and 3 percent on gadgets (mobile, laptop, etc.).

Pessimism about earnings

Making evident the financial crunch from the ongoing economic slowdown in the country, 65 percent of the households said that they felt squeezed or distressed when it comes to their earnings and expenses over the last 12 months.

In terms of savings, 57 percent of the households said their savings have reduced in the last 12 months while 18 percent said that it did not show any increase. The survey also revealed that households are relying more on the conventional banking system to save their money with 45 percent of the households keeping the majority of their savings in fixed deposits or savings account.

Households are increasingly pessimistic about their future. According to the survey, only 29 percent households expect earnings to increase in the coming 12 months. This is a big fall compared to the survey conducted last May when 44 percent expected a rise in income.

The survey saw 43,000 responses spanning across 218 districts.