Common Man

Common Man: Is he better off than the poor?

Money doesn’t grow on trees. True, money doesn’t grow on trees. That’s what we were taught in our childhood. And that’s what even our Honorable PM reiterated in his address to the nation after the Government’s decision to allow FDI in Indian retail. And who better than the common man can understand this. In 65 years of independence, if there is someone who has undergone a massive transformation, it is undoubtedly the “Aam Aadmi”, the “Mango Man”. Much more literate yet powerless, larger in number yet politically insignificant, a thousand times richer yet vulnerable to price rise and inflation.

Since policy level debates still keep raging about an absolute definition of poor, it sometimes becomes difficult to really separate them from the middle class. However, is the middle class common man really better off than the perceived poor? Every month his earnings get wiped out in a wave of EMIs, credit card bills, groceries, utility bills, fuel expenses and house rent. It’s hardly a matter of 7 days when he could see his salary getting vanished in the monthly Tsunami of expenses – painfully reading through the SMSs after any ECS from his bank account. And then spend the rest of the month wondering what actually a salary denotes. Just like the poor, even the common man lives in a more or less hand-to-mouth situation. Except that poor live in mud houses, we stay in brick-and-mortar apartments; poor doesn’t have an LCD, AC, refrigerator, microwave, home theater – we may have them all. But are we still better off ?Poor does not have any saving. So does most of the middle class. They do not have any constructive old age planning. So does a common man.

But before moving further, let’s hold on – if we feel that poor need financial literacy; if we feel that they need to be taught how to save money; if we feel that they need to be taught how to manage their finances then it’s a complete misconception. The poor are much smarter than the rich or even the middle class. For a villager living in abject poverty, every paisa is like a father – mother. The calculation is rather a way of his life. If he doesn’t do so, he cannot survive. Although the middle class has reasonable access to all kinds of financial instruments, we still keep wondering about what and how about savings whereas a poor villager may not even have a simple Bank account.

Common Man

So where does the common man stand. He is neither poor nor rich. He earns more than a poor, but still struggles to meet his ends. He may understand his environment much better but still remains in a bigger dilemma than the poor.

A simple example – I am sure not many of us would have actually considered knowing how much insurance coverage we have and how much is needed. In most likelihood, we assume insurance to be an investment. Whereas it’s essentially a risk cover against any eventuality of death. But unfortunately we take death for granted and only think in terms of investment rather than incurring a cost of securing our families in case of our death. An eventuality we are sure to occur but still keep ignoring.

Similarly, not many of us would actually bother to check our credit history as available with credit bureaus. In fact, we may not even be aware of the existence of credit bureaus although the first credit bureau was established in India 12 years back. Even I bothered to check my credit report only after applying for a home loan and learnt about a credit card default on my name for a fictitious amount of just Rs. 100 on which the credit card company kept on charging penal interest for 12 long months while I was assuming that I have cleared all my dues.

When it comes to savings and investment, no discussion is complete without any indication about real estate which is perhaps perceived to be a safe, guaranteed and lucrative medium of savings and money appreciation. But the satanic habitation of black money and builder-mafia nexus makes it a highly diabolical investment avenue. And with the corruption ridden system in our country, playing around with the relevant laws is almost on the fingertips of politicians, authorities, bureaucrats and of course the builders. In the absence of a real estate regulator, this becomes a pure arm twisting game. The recent real estate crisis in Noida Extension (UP) stands testimony to this. Triggered by a revolt by the farmers in the area against the authorities for rationalization of land acquisition compensation, the Allahabad High Court scrapped few land acquisition deals putting at stake all real estate projects in the region as also crores of money invested by more than 1 lakh buyers. In the midst of a fierce battle between farmers, authorities and builders, it is the innocent buyers who are paying the actual price – delay in property possession, unwarranted price escalations, the abrupt cancellation of bookings, unjustified penal charges, interest on bank loans even when construction is on hold and above all – harassment in the hands of the builders – the buyers are having enough on their platter to have a series of sleepless nights. Added to this, housing finance also remains to be loosely regulated business in India. And everyone seems to be taking undue advantage of all these loopholes duly aided by the helplessness of the buyers – the common man again.

So, somewhere the “Aam Aadmi” remains negligent, somewhere ignorant and somewhere helpless. Therefore, the million dollar question that keeps raging in my mind – “Is the common man really better off than the poor?”

Published by

Saurabh Dev

Mr. Saurabh Dev is currently engaged with IndusInd Bank Limited in Gurgaon and is part of their financial inclusion and microfinance initiatives. He has spent a major part of his career working on various financial inclusion and microfinance projects enabled through cost effective last mile technologies targeted to the poor and underserved in various parts of the country. He can be reached at – [email protected]

18 thoughts on “Common Man: Is he better off than the poor?”

  1. Dear Saurabh …. Thank you for the very interesting article. It is an eye-opener for many of us …. Indeed, the definition of poverty extends beyond the income level (e.g a dolar-a-day, etc) to other issues like vulnerability and empowerment. … Every one of us are vulnerable in life. But the poor are (or more appropriately, used to be) more vulnarable to ”income vulnerability” than the rich or average (or common) man. Because the poor have already been so vulnerable to this challenge, they have developed, over time’ variety of coping mechanism than the rich or the common man who only now have to face such serious vulnerability challenge like inflation!!. …. This is the issue that most of us do miis. The recent consensus on inclusive financial seems to accept this logic. … Indeed, poor people do not save according to the equation Savings = Income – Fixed Consumption but according to the equation Consumption = Income – Fixed Savings. … The poor ALWAYS have a fixed saving (for the worst day that may be forthcomming) — regardless of what they can eat today, even when they have to eat less than what they naturally need….
    Thank you again, and I hope this discussion would continue.
    Regards
    Getaneh Gobezie
    E-Mail:- [email protected]

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