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India economy and Household saving UPSC NOTE

 Indian Economy-  Saving based on Household savings. 

  • The release of the RBI Monthly Bulletin in September revealed that households’ net financial savings had fallen to 5.1% from 11.5% in 2020-21.

  • Financial liabilities of households rose faster than their assets

  •     This trend as an indication of rising indebtedness and increasing distress.

  • The growing household loans from SCBs are by 17% and 25% for education and vehicles respectively in 2021 – 2022.

  •  The government counter claims this with ,  household financial savings may be reducing, i did not imply total savings were falling.

  • Households took advantage of low interest rates after the pandemic to invest in assets such as vehicles, education and homes.

The optimistic claims in savings

  • There is evidence to support the government’s narrative of a shift from financial to physical assets.

  • Between 2020-21 and 2021-22, the construction sector was the fastest growing sector, growing at nearly 15% compared to2011-12 prices.

  • Liabilities in other non-financial assets have also increased

  • Education and vehicle loans from SCBs increased.

  • Households are taking advantage of the low interest rates set by the RBI after pandemic.

The pessimistic claims in savings

  • The fall in household net financial savings was driven largely by a rise in liabilities.

  • Gross financial assets declined marginally as a share of GDP between 2021-22 and 2022-23 from 11.1% to 10.9%

  • Gross liabilities, remaining steady at roughly 3.8% of GDP

  •  Outstanding credit card loans increased from 3.8% to 4.7% over this period

  • loans against gold jewellery rising from 1.07% to 2.16%.

  • Households taking on credit card debt and taking loans against jewellery to finance consumption.

The pessimistic claims in savings

  •  Loans from non-banking institutions, which grew by almost ten times in just the last year, contributing to 32.1% of the total rise in financial liabilities over this period.



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Learnerz IAS | Concept oriented UPSC Classes in Malayalam: India economy and Household saving UPSC NOTE
India economy and Household saving UPSC NOTE
Learnerz IAS | Concept oriented UPSC Classes in Malayalam
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