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Incentives on spending

June 30, 2009

Watching NEWS yesterday I happened to see an interview with a retail chain head, who had his innovative idea for the budget (called as the Big B by the news channels) and how the government could/should bring about a change in the policies to interest the consumer in spending more so that the retail industry could flourish.

His idea was that if the customer is somehow given incentive on spending (like some tax rebate on that) it would help the retail industry a lot. As according to him consumers can do with saving less.

What was he thinking when he said the consumer can do with saving less just to improve his growth…?

I know he and his retails chain might have had a bad year with this recession, all his sales dropping as people only went for essentials. So to minimize his losses he wants people to spend and falsely believe that they will save some in return.

The problem is we are the kind of consumer society who will think if it as a big opportunity to save, closing our eyes on the fact that you can never save by spending. No matter how many tax rebates we get still it is much less than the lump we spend. That could have been our saving for the rainy day.

This is not very uncommon, all retail chains attempt for it by offering ‘membership cards’ and even banks have such offers on credit cards where you collect points when you spend using the card. And you get rewards on basis on spending. The more you spend the more gifts you get. That is a common strategy by the retail chains and banks but expecting the government to make such policies to encourage sales is one step too far.

Being in the sales industry it should be something which could help people like me. If people start spending more we would have more opportunity to sell. But I am a consumer too and I feel… is this consumer society not spending enough already..?

This generation is practically living on loans. The salary structure is much better than before but all of us are stuck in our EMI’s for something or the other. If not for homes, cars, bikes or education, atleast everyone is still thinking of how to finish off their credit card debts.

When it comes to money call me stringent. If you don’t need it why buy it, especially if you can’t afford it.

I know that increase in spending will have a positive effect on the economy, when people buy more their will be more production and growth opportunities for small brands too, also it will create more job opportunities. But still there is a catch to it.

The government wants the revenue but most of these retail chains sell many ‘Foreign brands’ and the money they make either goes to the respective country where the products come from or their own pockets as how regular they are in paying their taxes we may never know, and the consumer is left with products he may or may not really need and a heavy credit card bill.

What do you think..?

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25 Comments leave one →
  1. June 30, 2009 3:34 pm

    me first 😛 rest later 😛

    yes you first.. 😀

  2. June 30, 2009 3:36 pm

    yes well said oorja, I do not have a credit card in india……… I find life so much earlier that way……….no tension

    that means u have one in America which is where you live and spend.. India is where you visit.. that is dangerous..
    😉 😀

    yes without the card you can limit your spending.. 🙂

  3. June 30, 2009 6:04 pm

    I think I spent my entire salary this month paying my credit card bills :)… I earned lots of points though 😀

    you did.. oh.. LOL @ points.. we do see a silver lining.. 😀

    We cannot blame retail chains or banks or credit card companies for coming up with such offers. It is their job. They’ll keep making fool of people as long as they keep finding one and trust me, they find more than one every single day 🙂 People have to wake up and start looking at what the other side of the coin has to offer.

    absolutely.. it is their job to attract customers.. it is us who must know th edifference between our needs and wants..

    And btw I noticed today that you are Sagittarian… I am a Sagittarian too 🙂

    you too a Sagi.. 🙂
    We Sagis follow this rule.. money works for us.. we don’t work for it.. :-D..

  4. June 30, 2009 6:46 pm

    sensible post! i agree with u…
    ppl sometimes put forth views without really thinking.

    i really didn’t expect a retail chain head to speak just for his industry’s favour.. how can people do with less savings..? will he ever do that himself..?

    When it comes to money call me stringent. If you don’t need it why buy it, especially if you can’t afford it.
    I agree. It may sound traditional, but ‘waste not, want not’ makes sense in the long run.

    i hope everyone undestands this.. 🙂

    i havent yet taken up a credit card for the same reason… i’ve seen the kind of trouble it has given some of my friends and relatives. it’s a pain really!

    me too.. don’t have a credit card.. i do use my debit card if in need. after all the news i have seen.. people having so much trouble after using cards.. i think i’ll live without it..

  5. June 30, 2009 7:08 pm

    😦 😦 😦 😦 😦 😦 😦 😦 😦 😦 😦 ( I hope you understand my situation after all those emoticons)

    Oh.. is it that bad..?

    good that your card broke..

    • July 1, 2009 10:26 am

      LOL @ oorja’s response!! 😀 😀

      Hey Ashwathy.. somehow i am not able to comment on your blog.. blogspot trouble i guess..

      • July 4, 2009 6:54 am

        😦 been hearing this trouble from dhiren as well…
        used to have it initially, then it died down. now its started all over again i think. damn!

        Move to wordpress… 🙂 somehow commenting on blogspot is more difficult.. always some trouble.. but still worth… as many of the blogs i read are on blogspot. so Friends please move to wordpress.. 😀

  6. June 30, 2009 8:08 pm

    /*you can never save by spending.*/

    well said Oorja.. 🙂

    and never ever get anything on EMIs and loans.. Its a burden to think about that all the years I have to pay that..
    very well written post Oorja 🙂

    yes when we opt for an EMI we are actually paying much more than the actual cost.. it is better to save enough first and then buy with cash.

  7. July 1, 2009 7:24 am

    I love my credit card… !! I have a platinum plus !! teee heee…

    I though would love to go back to the simpler days with my card !!!

    Platinum plus.. you seem like a real good consumer.. 😀

    • July 1, 2009 11:13 am

      good bill payer… !! not good consumer !!! lol… !!!

      and where do you think the bills come from..? 😀

      • July 1, 2009 1:15 pm

        wife wields an add on card… !! and younger bro tooo !!! lol….

        poor me… 😦

        add on cards are even more dangerous…

        really poor you.. lol..

  8. July 1, 2009 10:21 am

    aah well… tell me about loans and credit card bills… and spoil my mood! 😦

    Oh..u know i didn’t mean to do so…

    have u ever had ‘delhi ke laddu’? I am having each month!
    Doesn’t all of these summarize my thoughts? 🙂

    Rite.. 😉 😀

  9. July 1, 2009 12:56 pm

    he actly said that ?? emis are nothing but trouble .. strech ,stretch and strech .. heard the song ka ching by shania twain ? a few line i like ..

    We live in a greedy little world–
    That teaches every little boy and girl
    To earn as much as they can possibly–
    Then turn around and
    Spend it foolishly
    Weve created us a credit card mess
    We spend the money we dont possess
    Our religion is to go and blow it all
    So its shoppin every sunday at the mall

    Haven’t heard it but it seems like my kinda song.. 😀

  10. July 1, 2009 6:04 pm

    topics of spending remind of Shaina Twain’s wonderful and apt song Ka Ching. Have u heard it?

    We live in a greedy little world–
    that teaches every little boy and girl
    To earn as much as they can possibly–
    then turn around and
    Spend it foolishly
    We’ve created us a credit card mess
    We spend the money that we don’t possess
    Our religion is to go and blow it all
    So it’s shoppin’ every Sunday at the mall

    not yet.. but now i am on my way to….. 🙂

  11. July 1, 2009 6:05 pm

    hey I just noticed bedazzled’s comment after I submitted mine!! 😀 😀

    🙂 😀

  12. July 2, 2009 2:51 pm

    I had a credit card back in India and it was a nightmare. I just couldn’t control myself when I saw a good shirt, shoes, book or Dvd! 🙂
    But slowly I started to control the urge and now I am ok. I am not completely over it, but I am getting there. 🙂
    I always hated the idea of living my life to pay back an EMI and now I am doing that for my car! 😦

    Hey having a loan for a car is not that bad.. mostly big stuff on loans are ok..

    but as you said DVD’s or clothes.. those are the main culprits. we never know how much we spent on them till the big bill arrives.. 🙂

  13. July 3, 2009 8:02 am

    This is hilarious idea.

    isn’t it..? 😀

    @Amit: Everyone in India has EMIs, I have it for my home. 😉

    no wonder they made a bollywood movie out of it.. EMI – “liya hai to chukana to padega”.. 😀

  14. July 3, 2009 9:15 am

    This generation is practically living on loans.
    I so agree 😦

    all the credit cards aint helpin at all 😦
    the greed grows and grows and the debts keep piling up…

    *sigh*
    most of my friends are living like this..with this kind of lifestyle..

    yes credit cards were introduced to make life easier.. but excessive illogical use made it the big monster. now it is like riding a tiger.. 🙂

    I am just thankful I dont have a credit card..just one and that too I dont carry with me 😀

    me too.. 😀

    the best way is to carry enough cash for your needs. that way you can’t shop extra.. 😉

  15. July 4, 2009 10:23 am

    We do have EMI’s for two home loans but I think it’s as much about what you spend on, as how much you spend.

    well as i said earlier home loans are unavoidable and somehow reasonable in comparison to other purchases as it it an investment for life.

    Credit cards, and even Debit cards are a trap, I have spent more than I normally would have just because we were not paying in cash,… but the cards have their own conveniences, and I guess one just has to plan one’s expenses.

    self control.. is the key to (exciting window shopping) life.. 😉 😀

    I find the membership cards very annoying! I am sure they do great business with all these offers! They not only give you cards but also keep SMSing you their special offers.

    And brand names? Like Shania Twain sings, “… don’t impress me much” 🙂

    its their job.. can’t blame them.. (i too am in sales u see 😉 )

  16. July 4, 2009 12:34 pm

    Thank God he did not want tax rebates be given on buying from his store

    Actually he did but thankfully.. on buying form all stores and not just his.. he wished good for the whole retail community (owners)..

  17. July 5, 2009 12:49 pm

    I agree. You are right. I used to take cash earlier from my credit card! Then I had to pay so much interest!! After a couple of years, I stopped using the credit card and recently when I lost my debit card, the CC was not working! Why do I need such a card? The only thing I can do is pay for online domain name and hosting for my other site. That’s the only reason why I have this one (the other two were torn in to pieces and sent back to respective banks 🙂

    the world has come to a 180 degree now.. carrying cash is the safest way now… if you want to spend less.. 🙂

    Destination Infinity

    PS: Even the home loans are not very advisable when you don’t invest at least 70% of it, up front. Having a huge EMI every month will discourage you from being flexible about so many important things in life!

    yes even home loans are not advisable.. still not everyone has that much lump of money so.. loans are their only way out..

    and if/ when they do save that much money without the loan the prices would again be out of their reach.. so its a never ending cycle..

  18. July 5, 2009 6:08 pm

    Oorja,

    A very pragmatic and practical post.

    One more thing that business houses achieve by pushing sales is to bring what goods/services one would consider luxury today into the domain of necessity tomorrow. Like 10 years back broadband would be considered luxury–today it’s a necessity. Same holds true for many cosmetic and beauty products. Mind you, I’m just pointing out a trend–not that I’m against it. With time, all technology and products they enable us to produce become cheaper and their permeation increases.

    Peer pressure also plays a huge factor in pushing people to buy.

    Nice post!

    TC.

    you are right.. our definition of luxury has changed a lot in the past few years.. and the reason is.. salary packages becoming better and the change in people’s attitude towards spending..

    we are now into the enjoyment phase where all luxuries seem affordable and must.. also as you wrote peer pressure is very effective.. social networking sites make a very good example of that..

    we must know that the price we pay for that is that is not what it looks like..

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