4 ms·
It is easy to moralize when you don't know where the shoe bites. It might look decent to you from the outside but even decently paid struggle to keep up becaus
by drieddust 8y ago
It is easy to moralize when you don't know where the shoe bites. It might look decent to you from the outside but even decently paid struggle to keep up because of the following factors:
1. India does not have a social safety net so every man or family is for themselves. This just forces people to give first priority to accumulation of money.
2. Even a decent life style in India is not affordable unless you are a business which is either insanely profitable or knows how to hide profits. Even the top bracket earners can't afford decent life style unless they are willing to live hand to mouth or on credit.
3. Suburbs and small cities are so under developed that you can't live there unless you have made a decision to compromise your Children future.
Fun fact: My salary is in top 10-20% range of what you can get in India but the moment I step into India my savings rate drop to almost close to zero due to following factors:
Taxes: You salary is taxed at 35% effectively. This is money you are paying with no returns to be seen. Remember there is no social safety net. If you are saving for modest future via Employee provident fund, your in-hand income drops to 50% of the stated salary.
Rent or Mortgage: Unless you were lucky or have an ancestral property in the right place, you will be paying a decent chunk of your income to rent seekers who will push for a 10% increases Y-o-Y unless you are willing to move bases every 11 months. With Kids going to school, it's not easy to switch every year. You can save this money only when you are willing to put up in shady neighborhood or travel from out skirts for 2-3 hours each side.
Schools & Education: There are only a few good state run Schools so putting kids into Private Schools (which are ironically called Public School) is the only option. This costs significant chunk of your remaining income.
Transportation: You have to buy a car to get anywhere as public transport is overcrowded and not very comfortable especially for Children and elderly. Even then you don't save much as travel from your home to these public transport will still cost you decent money as you just can't walk to public transport.
- msiyer 8y ago> You salary is taxed at 35% effectively This is what is directly visible. Less than 3% of the population pays income tax while tax is deducted at source for the salaried class: https://economictimes.indiatimes.com/news/economy/policy/why-income-tax-payers-in-india-are-a-small-and-shrinking-breed/articleshow/56929550.cms https://economictimes.indiatimes.com/news/economy/policy/why... If you dare to save, the interest earned is taxed. If you try to spend, the spending is taxed - buy a house or a car or a motorcycle, all luxury items by Indian government's standards, you are taxed heavily. The bribes collected by the government officials increase the tax burden. By the way, bribes are now expected and people refusing to take or give are looked down upon: https://www.deccanchronicle.com/nation/current-affairs/211117/registration-department-is-most-corrupt-in-tamil-nadu-says-madras-hc.html https://www.deccanchronicle.com/nation/current-affairs/21111... All this while the mega rich are enjoying tax breaks. > rent seekers who will push for a 10% increases Y-o-Y unless The landlords are fleecing tenants. However, it is the tenants' responsibility to make sure the landowner pays tax: https://www.livemint.com/Money/hfutqMoI7miJYiIidCNV4M/If-monthly-rent-is-above-8333-landlords-PAN-is-a-must.html https://www.livemint.com/Money/hfutqMoI7miJYiIidCNV4M/If-mon...
- kamaal 8y agoThat is why the indirect taxes(fuel), other sales etc taxes are so high. There is also a suggestion that they do away income taxes completely, and may be tax petrol by additional 30 rupees/liter. >>The landlords are fleecing tenants. As of now it takes savings of a life time to afford a home in big cities. Its tenants who are getting the better end of the deal. You have to become a land lord if you are saving up for grandchildren(many do).
- drieddust 8y agoMost landlords have owned properties through inheritance which suddenly jumped in value when business grew around them. This in turn happened because Governments were complicit.
- kamaal 8y agoYes, that's called investing. You can start now. Or wait for the next 20 years, and complain that others did and you didn't. Also a lot of middle class can and does invest. It's the people with inability to defer instant gratification or just lazy are the ones at peril here.
- drieddust 8y agoYou are redefining investing. It is investing when you are deliberately holding on to something with an expectation of higher returns in future. You are implying that ancestors of these landlords knew business will suddenly bump up in late 90s. It's sheer luck,government complacency and nothing else. If you want to call it investing, fine with me. > Also a lot of middle class can and does invest. Yes the little they can save gets invested in already inflated properties or gold. Average middle class would not like to venture our into investing in unknown because they do not have the will to lose the little they have saved. > It's the people with inability to defer instant gratification or just lazy are the ones at peril here. You think having a car, living close to school and work in good neighborhood is instant gratification. I have lived in shady neighborhoods with narrow dusty street without any trees and boy it's not fun at all. If you think moving out of those places is called instant gratification then it's hard to argue.