EMI - Are the Indians ready for this credit culture?

Recently I have watched EMI, a movie starring Sanjay dutt. I am not writing movie review so I will not go into the topic of how the movie was. What impressed me was the topic of the movie, EMI (Equal Monthly Installments).

I have worked in indian corporate world for many years to have enough experience of the life of the young and contemporary India. Almost everyone of us was earning more than our parents. We were leading quite good life, going out for dinner, eating pizzas and spending weekends in the malls. Evrything seems very good. but there is a hidden truth that no one knows other the people who are leading kind of "good life". We were paying EMIs. These EMIs can be from credit cards to car loan to house loans.

Many of us had at least 2 credit cards from different banks. We use them in such a way that we can avoid the payment of the bills to maximum possible days without any penalty. Even when we can not pay them in that maximum time frame, we go for credit transfer to second card. Effectively we delay payment by almost 100 days. Even then many of my colleagues have to pay the bills in 3-6 EMIs.

Many of us are too young and have nothing to fall back on in case of any problem arises. We go for buying biggest possible car we can afford to pay EMI for. This is a drastic contrast to the culture of our parents who would have never gone for the biggest car but for the car that would have served the purpose of buying one. None of seems very enthusiastic enough to buy Maruti 800 anymore. Most of these young guys buy at least Santro or something costing in excess of Rs 500,000.

We do not think what will happen if we have some emergency, medical or personal, forget about losing jobs. If we get some other emergency, we always think that we have got so many credit cards so we can afford to spend a few lakhs from them. Everything is fine as long as we understand the cons of this kind of attitude, a new culture.

This new trend has given rise to consumerism in India and is one of the cause of India's exponential growth of urban India in decade. This has been much talked about in all the articles as 'India shining'. We started to behave and act like our American or European counter parts. But there is a basic difference in the life style of the two, Indian and our counter parts in developed countries.

One, though we try to behave like our counterparts but our roots are still liked to the culture of our parents. We change jobs every six months but we seeks and expect permanent and secure jobs from our employers. We are not ready to see pink slips yet. Neither we are ready to work on a petrol pump when we lose. This is a different issue that the working conditions of petrol pump in India are sub standard and exploitative. We have our parents and families living back in small town who see us as urban rich man and feel pride in the local community when they talk about us. Can we break the news of losing job to them? This is what happend in the case of Jet Airways when they fired over 1,000 employees in one go.

Second, people in developed countries have social security system. so they are not going to die of hunger anyway. China, that is always talked about its worse labour laws and long working hours, has public hospitals and education system much better and easily accessible to all the Chinese people.

I feel that we are not ready for the EMI culture. We need not spend all the money every month and try to save a certain percentage everymonth as our parents did. Because just earning more than our parents is not the only way of more happiness. We need to think about total happiness, something I will write another time.