Ambition is redefining the purpose of savings in India

The availability of credit allowed for aspirational savings.

By MVS Murthy 

What should we save for? Many of us would say, with a reflex, “Rainy Day!”. However, given the vagaries of the climate and the fact that the human race is more mobile today than ever, we could hit the rains before they hit us. So that goes out of the equation.

In India, we saved for many reasons, particularly pre-independence. We saved for lack – food, water, clothes, riots, etc. These were weapons of subjugation used by our erstwhile rulers. Post-independence, the concentration of wealth was with a few, and there was a market called the “black market” with inflated prices. We saved to outpace these prices, not just in the open markets but in the public distribution systems. We also saved for a cousin who made it to a university in the US, and the education was co-funded by all the uncles and other brothers of his who were working. There was no expectation of getting the money back, but getting the cousin to go to America was a matter of pride. These were in the late '60s/early '70s – women weren’t still progressively involved with higher education and subsequent work, largely.

Epiphany

1991 was an epiphanic moment that opened the Indian economy. This created a borderless world, and private banks and brands proliferated in the Indian market. Consumption opportunities were a serendipitous discovery. The availability of credit allowed for aspirational savings – home, car, travel, etc. Personal/educational loans funded upgrades in lifestyles and education. Thus, the onus shifted from an institution called Family to the banking institutions. We saved to plan for a better future and consume what was left. E-commerce, Q-commerce, UPI, etc., were yet to come.

Connect. Connected. Connectivity

The last 20 years have seen an explosion of technology and mobile connectivity, powering Digital Public Infrastructure, connecting deeper parts of the country into formal banking spaces, availability of rural credit, MSME support, development of infrastructure, bigger homes, and cars, etc.

The present stage of growth is being powered by parents who are well-heeled to afford quality education. Nuclear families allow easy passing on of homes, availability of transportation options, and lack of parking spaces are making cars less aspirational. However, luxury across Roti, kapda, gaadi aur makaan is pushing up our capacity or ability to buy. Today, wealth is not concentrated with a few. Good education, the opportunity to travel abroad, repatriate funds, and go entrepreneurial, etc., are among the many spark plugs firing engines of progress.

If life is good, and there are no rainy days, then what is left to save for?

Savings need a new hero – Ambition

A nation at the cusp of becoming a $7 trillion economy by 2030, and $30 trillion by 2047, is going through its Amrit Kaal. As you read this, industrial production is at a high, non-oil imports are increasing, vehicle registrations are rising, and so is air traffic. Viksit Bharat in the making.

Besides, India is getting connected through constantly increasing data consumption, road connectivity through Bharatmala is dotting 38,000 km, Sagarmala is bringing in 7,800 km of our water expanse, Udaan is connecting 250 more airports into the economy. UPI, digitisation of land records, digital electricity grids, etc., are all changing consumption, ownership, and distribution of utilities. All these are sequentially getting orchestrated on cue. Train connectivity, GCCs, manufacturing, etc., are becoming the new nodes of mobility of people, processes, and products.

All izz well! Really?

A generation that has it all has nothing to go for. However, when one elevates oneself into the ambition of a nation, one has so much more to save for. Viksit Bharat can’t happen without Swasthya Bharat. India has to save for being healthy – quality of food, fitness, and fine health. Borderless worlds expose us to better farm-to-kitchen learnings, lifestyles around running/cycling, etc., as much as to pandemics that will have cyclical patterns. Much like Voldemort, pandemics will keep lurking and will suddenly swarm us, using our demographic dividend as a catalyst of transmission.

Before Viksit Bharat is Shikshit Bharat

There are global formats of education, international colleges are setting up facilities in India, and global trade and politics are making India an attractive destination to invest in. The FDI numbers are a testimony. Working professionals, students, and parents have opportunities to reach for higher-quality education, refresh mid-careers, and believe that they will work into their 70s through the gig frameworks. Longevity of life will demand we keep learning and be relevant. Try ignorance, to compare opportunity cost! Education is about ambition.

Money on Tap

One of the collateral impacts of the efficiency and convenience of digital payments is ‘Money on Tap’. Imagine, we don’t need to keep cash at home, go to the bank, and write a cheque to ourselves, we don’t need to borrow from a neighbour and pay back; money can be accessed in an instant. That also means that if we are not using the convenience to save periodically, we will often have empty tanks, i.e., wallets, much earlier than the month-end.

There will be offers if there are brands, airlines, hotels, fine dining, etc., because cyclical patterns are now broken, and cycles have become much shorter. Our cupboards are a testimony to all that we hoard, while “track order” is a clear indicator of what’s at the gate!

India needs to save to slow down on the gluttony of consumption, the dumping of “pre-loved” stuff, and reorient brands to the slow life. Thereby contributing to a better world. The modern-day role model for savings is ambition – that of an individual and of a nation. There are chinks, short-sights, shoulder-on-the-wheel moments, to push, propel, and power both Indians and India.

Surakshit Bharat + Shikshit Bharat = Viksit Bharat

A porous world makes us vulnerable as much as it gives us the opportunity to be a part of prosperity in the making. Lack of ambition will distort the desire to save and drive us into despair. The demographic dividend would mean the denominator will pull/push pressure on the numerator. The government has a very significant role to play as Bharat and all of us Bharatiya log want to become Aatma Nirbhar. Education, health, infrastructure, and climate will demand aggressive and overweight investments. The price of progress will also increase the price to defend every inch of India. That will open up more careers of commitment to the nation.

Ambition fuels savings

The opportunity is to rise above individual microcosms, plug into the larger play, and work towards building ecosystems. So, how high is your ambition? What do you want to do? Where do you want to go? Let the savings begin.

(MVS Murthy, Chief Marketing Officer, Federal Bank.)

Views are personal, and do not represent the stand of this publication.