The COVID-19 pandemic has wreaked havoc throughout the world, including in India. The impact of the pandemic is not just limited to the loss of human lives, but economic losses as well. In fact, for FY2021, many rating agencies and the World Bank have announced the lowest expected economic growth since the liberalization of the Indian economy. Even the State Bank of India estimates a contraction of 40% of the GDP for first quarter of FY 2021. The pandemic led to the closing of many businesses, some of which are still not functioning at full capacity. This meant that the unemployment rate increased from 6.7% in March to 26% in April 2020, according to a report by the Centre for Monitoring Indian Economy.
All this has made the financial situation of many Indians extremely difficult. Many are struggling with paying their rent, loan instalments and even electricity bills. But there are certain ways in which you can mitigate the economic impact of the pandemic, including taking a gold loan. Here’s a look.
1. Manage Your Spending
Reducing unnecessary purchases at this time is more important than ever before. Divide your expenses into essentials and luxury segments. Things such as payment of bills, rent, EMIs, school fees, groceries and medicines would come into the essential section. However, ordering food from restaurants, Netflix subscriptions and going for vacations would fall into the luxury category. Try to limit your spending on non-essential items until you feel financially secure.
2. Go for Low Risk Investments
This is a time to be cautious and limit risk taking. Therefore, do not get caught up in trendy investments such as Bitcoin. Instead, choose low risk investments, such as fixed deposits, which are not market linked. Since they are not dependent on market conditions, they are an extremely safe form of investment. Plus, all fixed deposits offer insurance of up to ₹5 lakhs from the Deposit Insurance and Credit Guarantee Cooperation (DICGC). Apart from being safe, fixed deposits provide other benefits as well, such as great returns, tax saving and flexibility.
3. Consider Taking a Gold Loan
If you need some short-term financial assistance during the pandemic, then taking a gold loan can be a great option. Some of the reasons that make gold loans a great option in India are:
· Quick Processing
Time can be extremely important in an emergency. Normal loans can take several days to be processed, but with loan against gold, the whole process can be completed in just a few hours.
· Non-Jumping Interest Rates
When you take a gold loan from a leading institution like ICICI HFC, the interest rate stays constant throughout the tenure.
· Easy Repayment
The borrower can choose to pay off just the interest each month. The principal can be paid off upon release of the gold.
4. Learn About Relief Programs
The state and central governments have initiated many programs and subsidies to provide financial relief to those distressed by the pandemic. Try to look online or contact your local government to know about these schemes.
Apart from managing your spending, investing prudently and opting for gold loans, you can also reduce financial stress by looking for another source of income. Many online jobs have been created during the pandemic. Try to apply for them.