48% of households face decline in savings, hope for tax relief in Budget 2024: Survey

A survey conducted by research agency LocalCircles has revealed that up to 48% of Indian households are facing a decline in their earnings and savings for the current financial year as compared to the previous one.

The survey is based on a sample size of 21,000 people from 327 different districts in India. Within the cluster, 67% of respondents were male and 33% were female. Around 44% of the total respondents were from Tier 1 cities, 32% from Tier 2 cities, and 24% from Tier 3, 4 and rural cities.

According to the survey, many expect their savings to be reduced substantially in the current fiscal year due to inflation. In June 2024, the retail inflation rate in India came in at 5.08%, higher than the last three months.

A big proportion of the respondents expressed their concerns regarding the rising prices of basic expenses including food, rent, education, transportation, etc, forcing them to dip into their savings, borrow money, or sell their assets to pay for their subsistence expenses.

The study revealed that 15% of the respondents expect a drop of as much as 25% in their savings, and 7% expect their incomes to drop by more than 25% in FY25.

Households hope for tax relief

“Feedback from households indicates that many are hoping for some respite from this squeeze, be it a reduction in income tax rates, expansion of the income bracket that gets zero tax or increase of deduction limits under 80C,” the survey report said.

The government could also slash the income tax rate for those earning an annual income between ₹5 lakh to ₹15 lakh, news agency Bloomberg reported on June 21, citing sources. Additionally, the finance ministry may also consider lowering the tax rate for those in the highest bracket -- earning above ₹15 lakh per annum -- to boost consumption, according to a report by Reuters that cited persons privy to the development. This category of taxpayers is charged at a rate of 30% under the new tax regime.