Jan 24
I got into an interesting debate with one of my friends, about how EMI’s are partially responsible for the current recession, and how they are like worms for the economy. Not having reached any specific conclusion, I have decided to throw the debate open to all the Retail Dude’s, Let me hear your views about EMI, is it or is it not the real culprit. Use the comments section.
Cheers!
- Sarthak Taneja
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January 27th, 2009 at 4:23 pm
Hi Sarthak,
I totally agree that EMIs are one of the major reasons for recession and one should learn from it at individual level so that he/she can sustain inthe period or recession. It was fault in the payment of EMIs which has initiated it. And now when recession is here, people are loosing jobs, and are again not able to pay their EMIs, its hitting hard.
EMIs are like a problem in disguise and thats why you don’t feel there brunt at the time of buying an asset. Consumer feel that they just have to shell out a percentage of their Income and can posses a higher value product. But they forget that its an percentage of income and not saving, so, when there is no income, what will they do.
But still I won’t say that consumers are culprit. Main culprit are the corporate houses who sell products on EMIs knowingly that customer is not eligible (sub-prime). Sales Team in companies have huger pressure and they just want to achieve there target, by hook or crook to save there asses.
Lets start the discusion dudes….
January 28th, 2009 at 12:48 pm
Thanks Sarthak, for touching a very raw nerve.
I do agree with Rajeev, on the “seller” issues.
If you look at the animal world, none other, even mammals, apart from human beings require more than their “basic” inputs, to live. While we justify our ever-increasing “needs” for a “better life” by proclaiming ourselves as the “only” thinking species, what we “actually” keep doing is quite on the contrary!
Nature is quite complete on its own & even in Antarctica we do not find bears queues up to buy blankets. They use whatever nature has already provided, to save them.
EMIs are simply our greed & desires, in financial terms.
Intelligent marketers expose such weaknesses, fan the “dormant or latent needs” (in text-book lingo) and weave intricate nets around us.
Unfortunately, the entire financial system has, over the years, built on a simple agenda - of profiteering. Here too, the “needs & desires” compliment those of non-financial marketers and finally keep sucking out money, out of even the future earning of consumers.
This reminds me of a new ploy the Pantaloons group has started. Cleverly disguised under the aegis of Futute Group (which is hardly a popular marquee), so that the mother brands remain unscathed. The communication actually tells us to put in our cash reserves into a pre-paid (remember Petro card?) charge “now” & spend anytime “later”.
My untrained brain fails to understand why should I pre-pay for my future spending? I’ll either buy now, if I have the moolah, or buy later! Am I getting any FD type interest on the pre-paid amount? No! Then what’s the big deal?
This looks cleraly like another desperate marketing effort to obtain liquidity. From the retail customer! Apart from being an intrinsically flawed plan, it looks downright dishonest, much like the sensex manipulations!
I do agree that “sales” are always under pressure.
Frankly there’s no need to!
Just make them look at new markets, where millions are waiting, starry eyed, to buy the same goods!
And…they will pay cash too.
January 29th, 2009 at 12:07 am
Rightly brought out by Arnab on the “Needs and Wants” theory is the root cause. But i beleive its more interpersonal than business. FI’s are not just driving our needs but to a large extent to business houses by extending them credit. Surely though we are small nuggets for these piranahs. But as Rajeev said, there cannot be an emi without income, but doesnt it goes same for the word “BUY”. We choose to expose ourselves to risks without taking proper measures of inherent checks.I think its the greed that has got the better off individuals. FI’s have given us the power to buy, its just a diligent choice. Old school however teaches us to save than spend, but the gen x thinks they should keep up by investing in assets that multiply with inflation. Its just the wicked ways of the honest intentions. Although the way to get out of this recession is to spend, to set the dice out rolling.India being a major hub of sourcing, has a big onus of correcting other world economies.
Start Spending Dudes! its for the better.