Write a essay on life during lock down period for a man who lost his job due to covid 19 and had some financial issues in that period
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Answer:
The lockdown has had a catastrophic impact on the revenues of Indian corporates. To conserve cash, companies are resorting to layoffs by the hundreds. Almost every day there is news of some company or the other announcing downsizing. While some are doing so to remain afloat, others are cutting down on wage cost to try and bolster their sagging bottom lines. According to the Centre for Monitoring Indian Economy (CMIE), the coronavirus crisis has pushed up the unemployment rate in urban India from under 7 per cent in mid-March to more than 27 per cent for the week ended May 17.
Losing one’s job and the security of a regular income can turn one’s world upside down. People who don’t have enough savings to fall back on or have huge liabilities in the form of loan EMIs are the worst-hit. In April, the Reserve Bank of India (RBI) had directed all banks and other lenders to offer a three-month moratorium on loan repayments. Now it has extended the moratorium for another three months. This means that people who opt for the moratorium can get a reprieve of six months starting from March 1, 2020. While helpful, this is a temporary relief.
Those who have lost their jobs in the current crisis need to make a few fundamental changes to the way they manage their finances so that they are able to weather this storm. Here are a few tips they should follow:
No need to prepay low-cost debt: In the organised sector, retrenched staff get compensation and other benefits when they are handed the pink slip. In normal circumstances, any windfall that comes your way should be used to retire long-term debt, such as home and education loan. Prepaying a long-term loan makes sense because it allows you to save on interest cost. But these are not normal times. Therefore, you should not hurry to foreclose low-cost loans. While the interest charge on education loans is 12-14 per cent, that on home loans is only 7-8 per cent. Moreover, the interest repaid on a home loan is also eligible for deduction up to Rs 2 lakh under Section 24. This reduces the cost of this borrowed capital even further.
The tax benefit may not amount to much if a person has become unemployed and hence has little or no income. Even so, don’t prepay your home loan. Getting another job may not be easy in the current environment. Therefore, you need to hold on tightly to the cash you have and pay only when the EMI is due.
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