“We have come across multiple situations where individuals and families had to resort to taking personal loans or debt from other sources to fund their own or their family members' weddings,” says Abhishek Kumar, a Sebi RIA (SahajMoney).
Indian weddings are renowned globally for their grandeur and lavish celebrations that start a few days ahead of the wedding and continue till the final W-Day. Case in point and the talk of the town, the wedding of Reliance Chairman Mukesh Ambani's youngest son, Anant Ambani, and Radhika Merchant, daughter of pharma tycoons Viren and Shaila Merchant. The two tied knots on Friday(12th July) at Mumbai's Jio World Convention Centre.
What preceded the wedding of Ambani and Merchant is a long (and expensive) list of celebrations that began in March with a three-day gala for 1,500-plus guests in Gujarat. Rihanna, an international pop artist, performed, Tech billionaires Mark Zuckerberg and Bill Gates attended, David Blaine did magic tricks, and Indian Bollywood stars including King Khan danced - among many other grandeur events of that evening. The second leg of celebrations took place in June
In June, the Ambanis organised a four-day European luxury cruise, a ‘Samuh Vivah’ in Mumbai, and a grand musical night marking ‘Sangeet’ at the Nita Mukesh Ambani Cultural Center. The Haldi ceremony on July 8 was kept as a private affair but still made rounds around the media for the expensive jewelry and designer ensemble worn by the Ambani Bride.
A typical Indian Wedding of an average Indian family does all that sans the ultra-grandeur of ceremonies.
Based on their wealth and resources families try their best to make the event as memorable as they can get. While the Indian elite won’t shy away from making it an expensive public affair, an average Indian family would struggle to put together many expenses associated with weddings with a tight budget.
With an estimated expenditure of Rs 4,000-5,000 crores, Ambanis, according to media reports spent just about 0.5 per cent of their net worth. An average Indian family on the other hand usually ends up spending way more than their net worth to organise a grand wedding on societal standards.
“We have come across multiple situations where individuals and families had to resort to taking personal loans or debt from other sources to fund their own or their family members' weddings,” says Abhishek Kumar, a Sebi RIA (SahajMoney).
What people don’t realise is that there could be many potential financial repercussions of such an expenditure. “Often these debts lead to financial stress where to pay off debt the family has to cut down on many essential needs. Many youngsters fall into a debt trap to fund grand weddings where they forego investment to pay off the loans,” Kumar states.
What should an average Indian Family do to make do with wedding expenditures?
Says Kumar, “Instead of looking at an absolute number for a wedding budget we suggest that one should build an emergency corpus to take care of unplanned expenses and then work towards building a corpus which could take care of their planned wedding expenses. It is also important that one should not go beyond that amount to maintain their financial stability.”
Taking behavioural finance into account, is it wrong for families to spend a huge amount of their wealth on weddings?
Typically, a common or middle-class family would organise an overt-the-top grand wedding to fit into a social group they look up to.
“Aristotle once said that man by nature is a social animal so it is natural for them to share their happiness with their near and dear ones,” Kumar quotes. “So in our view as long as one can afford it and doesn't fall into financial despair because of it - they could spend on wedding expenses as they wish,” he says.
“The total net worth of Mukesh Ambani is around Rs 7.5 lakh crore so if media reports are to be believed he is spending .5% of his net worth on his son's wedding expenses. Other families should keep that in mind before spending on wedding expenses,” Kumar states.
On a broader level, can there be economic implications of extravagant weddings on average Indian families?
Kumar opines that extravagant weddings create an expectation loop where an average Indian family tries to overstretch their finances and pile on debt to fund wedding expenses. “The broader economic implication of such expenditure in terms of GDP is that consumption goes up and investment takes a back seat,” he says.
For the Ambanis, these extravagant wedding celebrations are a testament to their ultra-financial capabilities and a reflection of their social stature. In stark contrast, an average Indian family often spends a significant portion of their wealth on weddings. What is important for all though is an understanding of financial prudence to not fall into a debt trap.