income, savings and investment patterns of private sector ...

June, 2021. VOL.13. ISSUE NO. 2 https://hrdc.gujaratuniversity.ac.in/Publication Page | 265

INCOME, SAVINGS AND INVESTMENT PATTERNS OF PRIVATE SECTOR SALARIED HOUSEHOLDS IN KARNATAKA: A STUDY WITH

REFERENCE TO PRE LOCKDOWN AND POST UNLOCK COVID-19 PERIOD

Mr. Babu K. A. Dr. Giridhar K. V.

Abstract

Purpose of the research – The unprecedented pandemic COVID -19 created a havoc across the

globe. All economic activities were disturbed due to lockdown, and many people spent days

without having full squares of meals. Many migrated workers, including employees who were

working in private sector business undertakings had to lose their jobs, suffer without pay, or less

pay. The drop in income caused depletion in the savings of individuals, since they used their

savings for their consumption during pandemic. They were forced to leave their places without

any type of safety and security. Hence this research is carried out to assess the pre COVID – 19

and post unlock period income, savings, and also investment patterns of those individuals

serving in private sector enteprises belonging to education, automobile and telecommunication

sectors.

Methodology – A structured questionnaire is used as a tool for collecting the data from 180

private sectors salaried households, selected for the study as a sample respondents from three

cities in Karnataka state, viz., Bengaluru, Davanagere and Hubli, and from three sectors viz.,

education, automobile and telecommunication. Convenient sampling technique is adopted to

select the sample respondents from the study areas.

Major Findings – Analysis of the data collected showed that there is a significant difference in

the monthly income of the salaried households in the pre lockdown and post unlock period. But

there is no significant difference exisiting in their monthly expenses during both the periods. It is

proved that there is an association between monthly savings of the salaried households and both

the time periods. With regard to investment, there is a shift in the investment preference of the

Towards Excellence: An Indexed, Refereed & Peer Reviewed Journal of Higher Education / Mr. Babu K.A. & Dr. Giridhar K.V./ Page 265-277


salaried households from pre lockdown period to post unlock period. Gold, silver were the top

preferred investment opportunity before lockdown, but soon after the unlock period chit fund has

become the top preferred investment avenue.

Key-words – Income, Savings, Investment, Salaried Individuals, Covid - 19.

Paper type – Research paper

1. INTRODUCTION:

Income in any form is very essential in the life of every individual. It can be earned by any

individual from various sources. Salary is the only source of income, which is normally

presumed to be the consistent and regular source of income by its nature. But a COVID-19

pandemic disproved our assumption relating to salary income. Many salaried employees,

specially those engaged in the private sector undertakings faced the problems such as loss of

employment, reduced payment and also delayed payment, due to shutdown in the business

activities during lockdown period. Since income is not guaranteed and also not regular, their

savings also depleted to the greater extent, leading to reduced investments by these salaried

employees. The amount of money saved by them before COVID pandemic was used to the

maximum extent for the consumption purpose, and also to meet emergencies. After the pandemic

is subsided, all the business activities slowly resumed and employees were back on their jobs.

But the amount of earnings of employees working in private sector enterprises is not to the level

as before the pandemic. During this situation, their savings and investment patterns have seen a

drastic changes.

Investment is also an essential part in the life of every individual. It is nothing bu purchase of

assets or goods, both physical and financial with the purpose of building wealth which can be

consumed by them in the future. In finance parlance, investment is deployment of funds in those

assets which will offer returns in the future or they can be sold at higher prices to make profits.

Investments always carry some degree of risk, since they are always future oriented. Most of the

investors invest their savings in those investment alternatives which offer higher returns, without

any loss in money invested by them. From March 2020, entire world and every business sector is

worst affected by the pandemic. This has caused the change in the level of income, savings and

investment of salaried employees, especially in case of those serving in private sector. Hence, the

basic goal of this research is to analyse the income, savings and investment patterns of



employees working in private sector business enterprises, during pre and post pandemic COVID

- 19 period. People started saving and investing their small income in the safe investment

options, such as gold and other valuable ornaments. But some have grabbed the opportunity of

the occasion to invest part of their income in financial instruments, since their prices have

dropped to the maximum extent.

2. REVIEW OF LITERATURE:

In order to find out the gap existing in the literature on the proposed topic, following literature

has been reviewed.

Surabhi Kumthakar and Varsha Nerlekar (2020) conducted an “Analytical study of

investment patterns and investment preferences of Retail investors post COVID-19” with the

main purpose of identifying the impact of pandemic on the retail investors’ investment

preferences and also know whether these investors are still investing after the pandemic. It is alos

intended to know if they are still investing, which investment alternatives they most prefere

during post COVID pandemic to park their savings.

Manish Talwar, et al (2021) carried out a research study on the topic “ Has financial attitude

impacted the trading of retail investors during the COVID -19 pandemic?” to assess the impact

of six various dimensions of financial attitudes viz., financial anxiety, financial security etc on

investment pattern of the retail investors during the pandemic period. For this research, the

author has considered 404 retail investors as a sample size. The results of the study conscluded

that there is a positive influence of financial attitude on the investment patterns of retial

investors.

Arpita Gurbaxani and Rajani Gupte (2021) conducted a research entitled “ A Study on the

impact of COVID -19 on investor behavior of Individuals in a small town in the state of Madhya

Pradesh, India” in order to assess the effect of COVID -19 pandemic on the investment decisions

of individuals in SIPs. The study was carried out on individual investors, residing in small towns

of India. The data required was collected through survey.

Findings of the research depicted that, there was a reduction in the SIP investments, particularly

during the pandemic. It was found that there was an association between the savings and

investment behavior of individuals and the preventive measures taken by the government to

prevent the pandemic.



Pengpeng Yue et al, (2020) carried out a research titled “ Household financial decision making

amidst the COVID -19 pandemic” with the intention of analyzing the effect of COVID pandemic

on the investment decisions of households, by making use of the data collected by the Survey

and Research center in China regarding household finance. The results of the data analysed by

using linear probability and also probit models showed that, households infected with COVID -

19 lost their confidence in the economy, there was a change in their risk behavior and had

become risk averse.

Amory Martin et al (2020) conducted a research on “ Socio –Economic Impacts of COVID -19

on Household Consumption and Poverty” for the purpose of evaluating the sociological and

economical impact of COVID -19 on individuals, both during the pandemic period and also

during recovery period. The study is carried out in San Francisco area and the outcome of the

research showed that, in the absence of social protection, poverty rate will shoot up in the study

area. It is also found that the individuals with low income would suffer a lot.

Research Gap: Global pandemic COVID -19 has affected the lives of every one on this earth, in

one or the other way. Business activities are greately affected, and employees have suffered day

and night without having sufficient food. It is presumed that income, savings and investment

patterns of salaried households have witnessed a major change after the pandemic. This is very

ture particulary in case of private sector salaried households. There are very few researches on

this topic of assessing the impact of COVID -19 on the income, savings and investment patterens

of salaried households. But from the review of literature exisiting, it is found that there are no

studies on assessing the patterns of income, savings and investment of salaried households,

particulary in case of private sector employees in Karnataka state. Hence, this research study is

carried out.

3. STATEMENT OF THE PROBLEMS:

Salary is presuemed to be the guaranteed and consistent source of income for the salaried

employees. The unprecedented pandemic COVID -19 created a havoc across the globe. All

economic activities were disturbed due to lockdown, and many people spent days without having

full squares of meals. Many migrated workers, including employees who were working in

private sector business undertakings had to lose their jobs, suffer without pay, or less pay. The

drop in income caused depletion in the savings of individuals, since they used their savings for

their consumption during pandemic. They were forced to leave their places without any type of



safety and security. The pandemic has caused a major change in the investment patterns of

salaried employees, particulary from private sectors. Hence this research is carried out to assess

the pre and post COVID – 19 income, savings, and also investment patterns of those individuals

serving in private sector enteprises belonging to education, automobile and telecommunication

sectors.

4. OBJECTIVES OF THE STUDY:

Objectives of this research study are:

To analyse the Pre COVID -19 income, savings and investment patterns of salaried

households.

To analyse the post COVID -19 income, savings and investment patterns of Salaried

households.

5. HYPOTHESES OF THE STUDY:

The following hypotheses have been formulated for the research study:

H01: There is no difference in the income patterns of salaried households during pre and post

COVID -19 period.

H02: There is no difference in the savings patterns of salaried households during pre and post

COVID -19 period.

H03: Monthly expenses of the salaried households during both pre lockdown and post unlock

COVI -19 period are similar.

H04: There is no difference in the investment patterns of salaried households during pre and

post COVID -19 period.

6. RESEARCH METHODOLOGY:

The study is basically empirical one, based on data gathered from primary and also from

secondary sources. Respondents under study are the salaried households serving in private

sector organisations under education, automobile and telecommunication sectors.

Primary Data: A structured questionnaire was applied as a tool to collect primary data from

the sample private sector salaried households.

Secondary Data: Secondary data has been collected from various books, journals and

websites.



Sample Size: Since the population under consideration is very large, the data is collected

from only 180 private sector salaried households from Bengaluru, Davanagere and Hubli

cities of Karnataka state.

Sampling technique: The sampling procedure adopted under this study is Non-probability

convenient sampling.

7. LIMITATIONS OF THE STUDY:

The research is not free from the limitations. Following are th limitations embedded in this

research:

Sample size is small and restricted to only private sector salaried households.

The study is restricted to only three cities in Karnataka state.

Information provided by the sample respondents may be biased.

8. ANALYSIS OF DATA AND INTERPRETATION OF THE RESULTS:

Table No.1: Demographic profile of the sample respondents

Demographic Variables

Categories No.of sample respondents

Percentage

Gender Male 106 59 Female 74 41

Age (years)

Below 30 39 22 31 – 40 43 24 41 – 50 51 28 51 – 60 36 20 Above 60 11 06

Income Category during COVID -19 Pre lockdown (Rs.)

Below 20,000 26 14 20,000 – 30,000 59 33 30,001 – 40,000 43 24 40,001 – 50,000 34 19 Above 50,000 18 10

Income Category during COVID -19 Pre lockdown (Rs.)

Below 20,000 39 22 20,000 – 30,000 72 40 30,001 – 40,000 35 19 40,001 – 50,000 23 13 Above 50,000 11 06

Category of Education Sector 93 52



Employment Telecommunication Sector 48 27 Automobile sector 39 21

Table No.2: Monthly income of the salaried households during COVID -19 pre-lock down

period and post unlock period

Monthly Income (Rs.)

TOTAL Below 20,000

20,000 -30,000

30,001- 40,000

40,001 -50,000

Above 50,000

No.

O

f R

esp

ond

ents

Pre Lockdown Period

12 49 67 32 20 180

Post Unlock Period

40 61 55 15 09 180

TOTAL 52 110 122 47 29 360

Source: Survey Data

Null Hypothesis (H01):

There is no difference in the monthly income of the salaried households during COVID -19

pre lockdown and post unlock period

Table No. 3: Association between the monthly income of the salaried households during

COVID -19 pre lockdown and post unlock period.

Pearson Chi-Square Calculated Chi-Square Value

DF Table Value

Remarks

Pre and post COVID -19 period 27.84 04 9.49 Rejected ** - Significance @ 5% level Interpretation: The above table shows the Chi –Square test of the salaried households and their monthly income

during pre COVID and post unlock period. The calculated Pearson Chi-square value is 27.84 at

0.05 level of significance, which is greater than the table value (critical value) 9.49 (df = 4).

Hence, the null hypothesis is rejected. Therefore, it can be concluded that there exists a

difference in the the monthly income of the salaried households during pre COVID and post

unlock period.



Table No.4: Monthly expenses of the salaried households during COVID -19 Pre lock down

and post unlock periods

Monthly Expenses (Rs.)

TOTAL Below 10,000

10,000 -20,000

20,001- 30,000

30,001 -40,000

Above 40,000

No.

O

f R

espo

nden

ts

Pre Lockdown Period

38 74 52 11 05 180

Post Unlock Period

55 67 48 08 02 180

TOTAL 93 141 100 19 07 360

Source: Survey Data


Monthly expenses of the salaried households during both pre lockdown and post unlock

COVID -19 period are similar

Table No. 5: Relationship between the monthly expenses of the salaried households during


Pearson Chi-Square Calculated Chi-Square Value

DF Table Value

Remarks

Pre and post COVID -19 period 5.21 04 9.49 Accepted ** - Significance @ 5% level Interpretation:

The above table shows the Chi –Square test of the salaried households and their monthly

expenses during pre COVID and post unlock period. The calculated Pearson Chi-square value is

5.21 at 0.05 level of significance, which is less than the table value (critical value) 9.49 (df = 4).

Hence, it can be inferred that the null hypothesis is accepted. Therefore, it can be concluded that

there is no siginificant difference in the monthly expenses of the salaried households during pre

COVID and post unlock period.



Table No.6: Monthly savings of the salaried households during COVID -19 Pre lock down

and post unlock periods

Monthly savings (Rs.)

TOTAL Below 10,000

10,000 -20,000

20,001- 30,000

30,001 -40,000

Above 40,000

No.

O

f R

espo

nden

ts

Pre Lockdown Period

35 66 52 20 07 180

Post Unlock Period

55 74 43 06 02 180

TOTAL 90 140 95 26 09 360

Source: Survey Data


There is no association between the monthly savings of the salaried households during

COVID -19 pre lockdown and post unlock period

Table No. 7 Association between the monthly savings of the salaried households during


Pearson Chi-Square Calculated Chi-Square Value DF Table Value

Remarks

Pre and post COVID -19 period 16.08 04 9.49 Rejected ** - Significance @ 5% level Interpretation: Chi –Square test of the salaried households and their monthly savings during pre COVID and

post unlock period is shown in the above table. The calculated Pearson Chi-square value is 16.08

at 0.05 level of significance, which is greater than the table value (critical value) 9.49 (df = 4).

Hence, the null hypothesis is rejected. Therefore, the alternative hypothesis is formulated stating

that there exists an association between the monthly savings of the salaried households during

pre COVID and post unlock period.


There is no significant difference between the investment preference of the salaried

households during COVID -19 pre lockdown and post unlock period



Table No.8: Percentage Analysis of Investment preference of salaried households during

pre- lockdown and post unlock period

Nature of Investment

Before Lockdown

Tot

al N

o. o

f

Res

pon

den

t After unlock period

Tot

al N

o. o

f re

spon

den

ts

Yes No Yes No

Real Estate properties 112(62%

) 68(38%) 180 93(52%) 87 (48%) 180

Agriculture 43(24%) 137(76%

) 180 39(22%) 141 (78%) 180

Gold, silver & other

valuable metals

139(77%

) 43(23%) 180 105(58%) 77 (42%) 180

Bank Deposits 62(34%) 118(66%

) 180 76(42%) 104 (58%) 180

Post office 88(49%) 92(51%) 180 98(54%) 82 (46%)

180

Mutual funds (SIPs) 86(48%) 94(52%) 180 99(55%) 81(45%) 180

Shares and securities 47(26%) 133(74%

) 180 52(29%) 128(71%) 180

Corporate deposits 34(19%) 148(81%

) 180 48(27%) 132(73%) 180

Chit funds 97(54%) 83(46%) 180 109(61%) 71(39%) 180

ULIPs 55(31%) 125(69%

) 180 67(37%) 113(63%) 180

Derivatives 12(7%) 168(93%

) 180 18(10%) 162(90%) 180

Source: Survey data Interpretation:

Perentage analysis of the data on the pattern of investment of the salaried households before

lockdown period showed that, gold, silver and other valuable metals is the top preferred



investment option by the salaried households, followed by real estate properties, chit funds etc.

But after the unlock period, there is a change in the pattern of investment by the salaried

households that, chit fund is the top preferred investment avenue, followed by gold, silver and

other valuable metals and mutual funds. Hence it can be inferred that there is a difference in the

investment prefence of salaried households during COVID -19 pre lockdown and post unlock

period.

9. MAJOR FINDINGS OF THE STUDY:

Following are the major findings of the study which are presented as below:

It is found that there is a significant difference in the monthly income of the salaried

households during pre COVID -19 lockdown period and post unlock period. Income of the

salaried households reduced during post unlock period, compared to pre lockdown period.

There is no siginificant difference existing in the monthly expenses of the salaried

households during pre lockdown and post unlock period.

It is found that there is a significant association in the monthly savings of the salaried

households during pre COVID period and post unlock period.

From the analysis of the data, it is ascertained that the salaried households before lockdown

period preferred gold, silver and other valuable metals as the top preferred investment

options. But, after the unlock period, their preference of investment shifted towards chit fund

and mutual funds along with gold, silver etc.

10. RECOMMENDATIONS:

Following are the suggestions given based on the findings of the study, to make the

research more meaningful.

Thre is a significant reduction in the income of the salaried households during post unlock

period, but there is no difference in the expenses of the salaried households during both pre

lockdown and post unlock period. Hence, the government should provide some kinds of

incentives to the salaried employees serving in the private sectors, as their income is not

guaranteed.

Since the savings of the salaried households has seen a major change in the post unlock

period when compared to pre lockdown period, it has hampered their investment activities.

It in turn has affected the investment activites too. Hence the government should encourage



these salaried households to save part of their income, and invest in financial instruments,

which can contribute funds for the economic development of the country.

11. CONCLUSION:

The pandemic COVID -19 troubled all the economic activities throughout the globe.

Lockdwon brought all the economic actitivitis to a stand still. Many people had to spend days

without having sufficient food, due to unemployment and also due to non payment of

remuneration. This pandemic troubled private sector salaried employees to the greater extent.

Their income, saving and also investment patterns were presumed to be affected to the greater

extent. Hence this research study is carried to assess their pattern of income, savings and also

investment during pre COVID -19 lockdwon and post unlock periods. It is found that there is a

significant differene existing in the income, savings and also investment patterns of these private

sector salaried households. But there is no significant change in their patterns of expenses.

Hence, it is recommended to the government to ensure guaranteed income and reduced expenses.



References

1. Surabhi Kumthakar and Varsha Nerlekar (2020) “Analytical Study of Investment patterns

and investment preferences of Retail invetors post COVID 19”. Journal of Seybold

Report, Vol.15, Issue 8, ISSN: 1533-9211. Pp 1-17.

2. Manish Talwar, et al (2021) “ Has financial attitude impacted the trading activity of retail

investors during the COVID-19 pandemic?”. Journal of Retailing and Consumer services

(58), p p. 1-11.

3. Arpita Gurbaxani and Rajani Gupte (2021) “ A Study on the Impact of COVID -19 on

Investor Behaviour of Individuals in a small town in the State of Madhya Pradesh, India”.

Australasian Accounting, Business and Finance Journal, Vol.15, Issue. 1, pp 68 -92.

4. Pengpeng Yue (2020) “ Household financial decision making amidst the COVID -19

pandemic”. Emerging markets finance and trade, Vol. 56, No. 10, pp 2363-2377.

5. Amory Martin et al (2020) “ Socio – Economic Impacts of COVID -19 on Household

Consumption and Poverty”. Economics of Disasters and Climate Change. Vol.4, pp. 453-

479.

6. https://www.employmentstudies.co.uk/system/files/resources/files/The_impact_%20of_C

OVID-19_on_low-income_households.pdf

Mr. Babu K. A.

Assistant Professor and Research Scholar

Department of Commerce and Management

Government First Grade College for Women, Davanagere, Karnataka, India.

Cell No. 9945431055, E-Mail: [email protected],

&

Dr. Giridhar K. V.

Assistant Professor

Department of commerce & Management, Sahyadri Commerce and

Management College Constituent College of Kuvempu University

Shivamogga-577203

Cell No. 9980647833, E-Mail: [email protected]

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