Majority of households in urban areas do not set aside funds to deal with emergency situations like natural calamities, sudden job loss and medical emergency in the family, according to a survey by Assocham.
Those people who have some savings, have it in the form of either gold or silver primarily meant for marriages, the industry body said.
The chamber claimed it has surveyed about 1,500 individual households in cities like Delhi, Mumbai, Chennai, Kolkata, Bangalore and Pune.
“About 1,275 respondents said they have not set up any fund to deal with emergencies like sudden job loss, death or a medical emergency in the family, natural calamities, income delays, sudden relocation and other such unpredictable factors,” the survey said.
The respondents, however, said they have parked maximum of their hard earned money in options like debt/equity market, realty sector, bullion and safe securities like bank fixed deposits and provident fund.
The respondents said they feel the main glitch is that these investments cannot be easily liquidated without major tax consequences.
The study further said the surveyed people believe that there are few investment options available that keep money both readily available and safe.
“A contingency fund is not meant to get higher returns but to ensure that it is there in case need arises. For this purpose, one should not invest funds in options which are volatile but something that is easily encashable within a short notice,” Assocham Secretary General D S Rawat said.
Therefore, urban households must make it a habit to save at least 25 per cent of their monthly income in liquid cash which is easily accessible to meet the contingencies, he added.