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Political Play
CA Dr Sunil Gupta
Save to save your future 23 April, 2014
Residents of metro cities are proud of their lavish lifestyle. Movies every weekend, dinners in luxurious restaurants, EMI-backed cars, and branded clothing are what we feel our world is. Definitely, the rise in the spending capacity of citizens represents the strength of the nation’s economy.

However, other parameters too exist that measure the vulnerability of the economy to contingencies and tough times. Every penny that you spend/consume is what you do not save. Higher your consumption, lesser the amount of savings and this in turn, lessens the overall savings of the economy. Let us first decide whether or not to save.

Future is unknown - the bare fact, which has helped insurers to set up regional offices in every corner of the nation. Hence, you may be asked to spend more than what you expected tomorrow. That too, without the option of postponing. This is when your savings turn out to be blessings, helping you spend on critical matters without any hesitation.

Let’s understand this with a situational analysis. In case I am paid INR 300 per day and I spend 200, saving 100 for future contingencies. Now, post 10 days I can afford visiting a doctor and shed 1000 that I saved. Not just for risks, we save for inflated benefits too. I could have bought a school uniform and books for my daughter with the saved 1000.

Yes, these are too common facts and we have learnt these from our ancestors. Yet, are we moving on the right track? 200 for a movie ticket, which comes out to 400 for 2 and 1000 for 5, and most of our movies are a hit. Ranging from glasses and shoes to cars and cellphones we possess, we are competing with the never-ending competitors. MNCs, which have helped Indians fetch handsome salaries, have on the contrary extended money to the hands of untested.

The other effect is the enhanced purchasing power of one section of the society, which has lured sellers to extract more profits at same cost; however which in turn has let down those with restricted pays. The wide gap is bound to widen further with unjustifiable spending habits.

Let us also know how our spending and savings affect the overall economy of the nation of which, we are a part. The corporate entities and the government too access available savings through banks and capital market by either borrowing or issuing shares/ bonds. Imagine the trouble when financial institutions do not have enough funds (savings from households) to meet the nation’s financial needs.

Sub-optimal economic growth, sub-optimal job creation, and subnormal living standard in comparison to nations with better savings performance are the outcomes. Then, with inflationary powers you are bound to save nothing even if you wish to.

Imagine a distinct scenario now. Low saving households eventually enhance the burden on the government to provide social welfare services, limiting the government’s capacity to spend on infrastructural development viz. roads, railways, schools, hospitals, and ports.

This in turn affects the growth of the industrial sector that demands proper infrastructure to prosper. Savings, thus is one of the most vital pillars of the economy and households are its key constituents.

I ran across these lines somewhere and found it interesting, ‘Do not save what you are left with post spending; rather spend what is left post saving’. Herein too, start early, make sure that you comprehend your future financial needs, and entrust your money to reliable financial institutions.

Editorial NOTE: This article is categorized under Opinion Section. The views expressed in this article are solely those of the author and do not necessarily represent the views of In case you have a opposing view, please click here to share the same in the comments section.
About The Author
A Chartered Accountant by profession and Director on the board of Punjab National Bank (PNB), General Insurance Corporation of India (GIC) and Rural Electrification Corporation Limited (REC). Dr. Sunil Gupta is working flawlessly for the economic and social prosperity of India. His Linkedin and twitter handles are @cadrsunilgupta. Facebook page is CADrSunil.
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