Rising Cost Of Living Makes It Tough To Realise Dreams

The number of willful defaulters had gone up from 2,154 in March 2020 to 2,664 in March 2024 and the amount they owed rose from Rs. 1,52,860 crore to Rs. 1,96,441 crore in the last four years, as per RBI data

Recently, I met Sangeeta Yadav at a dental clinic, where she works as an assistant. She earns Rs. 10,000 per month. She is the only assistant to the surgeon, who runs the clinic in a charitable building where he has to pay no rent for the space being used by him.

Despite her job commitments, she is diligently pursuing her university education through a correspondence course.

Sangeeta comes from a hardworking family. Her father is employed in the High Court, while her mother holds a private sector job. Her brother works as an accountant in a public sector bank. Meanwhile, her younger sister, who is still in school, stays at their rented home during the day as all other family members are occupied with their jobs. She, too, is completing her education through distance learning. The family also owns a house in the city’s semi-urban area, which has been let out.

Curious about her choice of correspondence education, I asked Sangeeta whether she would have pursued her studies as a regular student if financial constraints were not a concern.

Her response was thoughtful and revealing. “The cost of living is quite high. Some money has to be set aside for marriage and other expenses. I cannot rely on my parents for my personal needs, so I chose to work. This job allows me to earn while also giving me enough time to focus on my studies,” she explained.

Notwithstanding the challenges, Sangeeta remains optimistic about her future. She finds contentment in her current situation and harbours aspirations of securing a government job. “If God wills it,” she added with a hopeful smile.

Despite an estimated monthly family income of no less than Rs. One lakh, her parents are still unable to provide their two daughters with the financial support needed to focus on their studies and build their careers. Her case is not an exception but rather a reflection of a widespread reality. In today’s economic landscape, even families earning one lakh per month in metropolitan cities, as well as Tier I and Tier II towns, often find themselves struggling to make ends meet. Even a family with a monthly income of Rs. 1.50 lakh has to face several financial challenges in maintaining a standard lifestyle.

If this is the financial strain experienced by middle-income families, the condition of daily wage earners is even more distressing.

The national-level minimum daily wage averages at approximately Rs. 178, amounting to around Rs. 5,340 per month. However, wages vary significantly by region, ranging from a low of Rs. 160 per day in Bihar to Rs. 423 per day in Delhi. The concept of a ‘living wage’—one that ensures a decent standard of living—remains an elusive dream for millions in India. While discussions around economic reforms and wage restructuring continue, the pressing question remains: When will a living wage become a reality for all?

Is anyone truly concerned about the soaring cost of living, driven by expensive education, healthcare, and prices of essential goods? It seems not. Due to financial pressure, credit card transactions have surged dramatically in the last three years, touching Rs. 18.31 lakh crore by March 2024, which is almost triple the Rs. 6.30 lakh crore recorded in March 2021. However, this surge comes with a warning sign.

According to TransUnion CIBIL data, credit card defaults have been steadily rising-1.8 per cent in June 2024, up from 1.7 per cent six months earlier and 1.6 per cent in March 2023.

Meanwhile, the outstanding amount on credit cards scaled to nearly Rs. 2.7 lakh crore in June 2024, up from Rs. 2.6 lakh crore in March 2024 and just over Rs. two lakh crore in March 2023. Let us mark here the fact that the majority of credit card users in our country are either professionals or salaried people. It will be interesting to know if the banks have started issuing credit cards to our esteemed daily wager sisters and brothers as well. When it comes to giving loans or cards to the poor, our banks meticulously assess the creditworthiness of applicants, ensuring that the risk of default is minimised. As a result, individuals from lower-income groups often face challenges in securing credit unless they can provide adequate guarantees or collateral.

The number of willful defaulters had gone up from 2,154 in March 2020 to 2,664 in March 2024 and the amount they owed rose from Rs. 1,52,860 crore to Rs. 1,96,441 crore in the last four years, as per RBI data.

As of September 30, 2024, the gross non-performing assets (NPAs) of public sector banks (PSBs) in India stood at approximately Rs. 3.16 lakh crore (3.09 per cent of outstanding loans), while private sector banks had gross NPAs of Rs. 1.34 lakh crore (1.86 per cent of outstanding loans).

Without a reliable means of repayment, banks hesitate to extend loans or credit cards to those with limited financial security. Our banks wrote off Rs. 2,36,265 crore in NPAs in FY 2018-19 and Rs. 58,786 crore in FY 2014-15.

A majority of the beneficiaries must not be people from weaker sections of society. Therefore, in a country like India what are the viable options we have to reduce income disparities and increase people’s earnings so that they cope with the rising cost of living effectively and lead a decent life?

I will strongly recommend expanding and improving government schools with better infrastructure, trained teachers, and modern curriculum; encouraging vocational training and skill development programmes aligned with industry needs; introducing financial aid, scholarships and digital learning tools to ensure equal access for underprivileged students; promoting lifelong learning through short-term certification courses in fields like IT, healthcare, and manufacturing; and focusing on women’s education and skill training to boost their participation in the workforce.

The Central and state governments should also strengthen rural employment schemes like MGNREGA with higher wages and broader work opportunities, promoting remote work to increase employment opportunities for people in smaller towns and rural areas; higher taxation on wealthier individuals while reducing the tax burden on lower-income groups; expanding social security benefits such as pension schemes, affordable healthcare, and unemployment insurance; and using technology to prevent leakages and ensure subsidies reach the intended beneficiaries.

(The writer is a senior journalist, author and columnist. The views expressed are strictly his personal)