Guest AuthorPavan Soni

Revisiting the disease called EMI

By | Dr Pavan Soni | IIM-B Innovation Evangelist 

Few years back I wrote a piece reflecting on how EMIs kill creativity, which is by not allowing us to pursue our passion, and by keeping us grounded on continue doing the mundane helping us pay the EMIs. In another piece, where I dub EMI as ‘Ending Morality and Intellect’, I opine that getting hooked to an indebted, EMI driven life, often makes us compromise on morality and intellect by not letting us invest on ourselves, and by getting soaked in instant gratification. The instant gratification and living beyond our means not only has a micro-impact of individual’s behavior, but also has a macro impact on national economy. Let me put down the moral hazard of this kind of behavior.
India is moving from a savings economy to high levels of consumerism
According to the World Bank data, the gross savings, an indication of savings and hence investments back into the economy, India has slid from 34 percent in 2010 to 30 percent in 2012, whereas for China it stood at 51 percent in 2012, and for Singapore the figure was 48 percent. According to a survey by National Sample Survey Organization (NSSO), nearly 22 percent of household in cities, and nearly 31 percent in villages are under severe debt. One of the factors is that consumerism is growing at a rampant speed, and there is easy, and often unethical, means of raising credit. While consumption is good, a thoughtless consumption isn’t. And what I means by thoughtless consumption is when one goes well beyond the means to secure a current gain, while often jeopardizing future possibilities and even survival. 
Savings and frugality has been the virtue of India for several centuries. How else are we able to feed some many mouths and foster so many families without consuming all the world’s resources? While most of the European economies are making an earnest call for austerity measures, if in India we pay no heed to the disastrous effect of this reckless consumption, we are headed for a clear disaster.
Beech dee (बेच दे )
If you have seen the recent campaigns by online shopping and trading portals, such as FlipKartQuickr, and OLX, amongst others, you can’t miss getting enticed by how easy it is to sell off old stuff (one which can perhaps serve you well for few more years) and buy new ones from another shopping destination. It looks like a nexus between say Quickr and FlipKart or Myntra, where one portals helps you get rid of slightly dated stuff and other helps you secure latest, just to see those fading away in no time. 
Easy access to (multiple) credit cards, inflater salaries (owing to a weak rupee), and easy online access, have lead to buildup of this ticking time-bomb where the citizens are becoming consumers and they are busy amassing stuff, much like what Americans did post WWII. And we all know that this is just unsustainable. 
Remember, when selling and buying becomes so easy, we loose value of stuff, and that’s precisely what’s happening- all durables become consumables
Are we investing on ourselves sufficiently?
What’s the one thing that undid Europe and most of America in last one decade? I think it is loss of competitiveness. Most American firms and people, and same is largely true for Europe, have lost their competitiveness, or differential value add, to Asian people and economies, more specifically China, South Korea, Singapore, and to some extent, India. 
What gives us this confidence that we won’t lose our competitiveness to the next wave of countries and people? Economic forces are brutal, and rightly so. Most of the IT industry is riding on the wave of a weaker rupee and a good population of English-speaking Indians, and same is true with other services industries. Most employees in such a meleau are drawing vulgar salaries for doing some menial jobs, for people on the other side of the trade don’t have very many options. By mounting on this proverbial treadmill we are undoing ourselves for the long run, and very soon we will have to re-look at what we are really good at.
I believe that our young crop really takes some time and money off from spending on stuff, to spending on oneself, on things such as higher-education, skills development, and even honing an awareness about international affairs. Else it’s quite bleak from here on.
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