Changing societal financial behaviour

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SECURE FUTURE: Financial planning can protect families from economic shock and ensure steady incomes.
SECURE FUTURE: Financial planning can protect families from economic shock and ensure steady incomes.

Impact of emerging social and economic trends

The changing face of Indian society is bringing with it new challenges and opportunities. It will be a new India where products and service offerings will be tailored to suit a new set of consumers.

“Any change, especially when it cuts across the fabric of a system torn between a rigid past and an enchanting future, needs to be supported by attractive incentives.”India has come to be known as a nation producing value-enhanced, superior, trained human power. Indians have made their mark in the fields of information technology, biotechnology, pure sciences and economics.

With the globalisation of the job market, demand and acceptance of Indian skills worldwide has opened up opportunities for new jobs within the country, particularly back office operations of multinational corporations. Furthermore, the domestic service sector itself is witnessing robust growth.

The emerging flat world is bringing about a confluence of cultures and new lifestyles across India. The new lifestyle trends are altering the fabric of Indian society and also modifying its social and financial behaviour.

Shift in consumer tastes

The shift in tastes and preferences of Indian consumers from traditional and conservative looking product lines to more varied, modern and liberal assortment of commodities can be attributed to some social and economic trends indicated below:

Joint households making way for nuclear families.

Increased mobility, especially for career advancement.

Increase in the number of working women and a growing awareness among women to carve a career while managing a family.

Increasing tendency to spend on fashion, health, fitness, education and more importantly ’self’, attributed to increased incomes, societal factors and independence from parental pressures.

The emerging trends are more pronounced in metropolitan cities because of the availability of a broader range and better quality of products and services there. Overridden by guilt over protracted absence, fatigue or work pressures, the parent-centred family has changed its orbit and become child-centred. For most families, cultural values used to be imparted to children by grandparents, but with increased urbanisation, values are now self-acquired. Technology has taken the place of grandparents and mothers as custodians and teachers of culture.

With joint families disintegrating, the social and financial responsibilities of the household have to be shared by husband and wife in the nuclear family. The joint family was a protection against untoward incidents. That natural protection now needs to be replaced by financial planning to protect families from economic shock and ensure steady incomes to manage old age needs. A Max New York Life-NCAER India Financial Protection Survey (IFPS), an all India study conducted in 2006 across 63,000 households, confirms the change in financial behaviour of Indian households.

It is seen that 82 per cent of the households save for emergencies and 69 per cent for old age. At the same time, an increasing trend is seen in literacy and education levels. There is a growing inclination to provide quality education for children. The Max New York Life-NCAER survey also revealed that 81 per cent of Indian households save for children’s education, a priority second only to emergencies. Seventy-nine per cent of rural households also save for children’s education.

Gender discrimination

Career opportunities and better education have offered women greater financial and emotional freedom; this is levelling the playing field at home.

However, this change in social standing of women is evident more in urban India, especially in upper income groups. Also, gender discrimination persists in major sections of the society, which acts as a major impediment for women acquiring basic education and social skills.

The financial services sector, including life insurance, can play an important role by developing products specifically designed to meet the requirements of women. Life insurance is also helping women in urban India through a micro-entrepreneurship initiative where women can have the flexibility of managing their time and still earn to be financially independent by being distributors of insurance. Further, in the same sector, great opportunities, especially in sales, training and servicing, are on offer for women. The initiative needs to gather momentum both in rural and urban India to bring a lasting change in the social structure of Indian society.

Rural India’s needs

Technology has also made a significant impact on the lives of consumers. With television and the Internet extending their reach to rural India, people are better informed and their aspirations have changed. There is a need to understand the consumer behaviour and needs of rural India and develop products, distribution channels and communication media specially to address those needs.

The changing face of Indian society is bringing with it new challenges and opportunities. It will be a new India where women and children will claim more importance, where rural folks will be more demanding and where products and service offerings will be tailored to suit this new set of consumers.


The author is Executive Director, Distribution,

Max New York Life



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