Handful in A'bad set aside emergency fund: Assocham survey

Majority of households in Ahmedabad city do not set aside funds to meet emergency expenses, according to a recently concluded survey by apex industry body Associated Chambers of Commerce and Industry of India (Assocham).

The random survey was conducted by Assocham under the industry body's Social Development Foundation (ASDF) to ascertain how households in urban India prepare to meet life's contingencies in wake of the economic slowdown.

The conclusions of the survey revealed that about 60 per cent of households in the city do not set aside any funds for meeting emergency expenses. However, the savings are primarily done by the households for marriages and other related purposes, it found.

For the survey Assocham representatives interacted with about 150 individual households in the city between June 15-July 15.

About 90 respondents in Ahmedabad said they have not set up any fund to deal with emergencies like sudden job loss, death or a medical emergency in family, natural calamities, delay in income, sudden relocation and other such unpredictable factors.

As many as 40 of these said they would take a loan in an emergency. Of the remaining about 30 said they would be forced to borrow money from relatives or friends and rest of them said they would disregard other monthly expenses and even be forced to mortgage or sell off their assets.

Reasons for not maintaining an emergency fund include very few investment options that keep money both readily available and safe. Besides, most of them said they have deliberately not maintained an emergency fund as it's ought to be liquid as far as possible, which gives lower returns.

Only about 60 respondents in Ahmedabad said they had emergency savings to meet critical and unexpected expenses.

The findings of the survey substantiate findings of the Reserve Bank of India's (RBI) recently released annual report, according to which the financial savings of Indian households as a proportion of the gross domestic product (GDP) plummeted to a 20-year low of just about 8 per cent in 2011-12.

"A contingency fund is not their to make money but to ensure its there in case need arises and for that one should not be in anything that is volatile but something that is easily encashable within a day's notice or so and something not necessarily large but effective," said D S Rawat, national secretary general, Assocham while releasing the survey findings.