False
Download Learnerz IAS app from the Play Store now! Download

$show=search/label/May%202022

 


India's Falling Household Savings: Causes and Concerns UPSC NOTE

 The Problem:

  • Household savings in India have fallen significantly, with net financial savings reaching a 40-year low.

  • This decline is despite a slight increase in physical savings (like gold).

Understanding Net Financial Savings:

  • It's the difference between a household's financial assets (savings) and borrowing.

  • Financial assets include bank deposits, investments, etc.

  • Borrowing includes loans from banks and other financial institutions.

Possible Reasons for Lower Savings:

  • Increased Consumption: People may be spending more and saving less, boosting short-term demand but potentially hindering long-term growth.

  • Higher Investment in Physical Assets: Savings may be used for investments in things like housing, stimulating the construction sector.

  • Rising Interest Payments: Higher interest rates could lead people to use savings to cover debt payments, reducing net savings.

What the Data Shows:

  • Consumption remained relatively stable, suggesting the first reason is unlikely.

  • Physical investment increased slightly, but not enough to explain the entire savings drop.

  • Household borrowing has risen sharply, suggesting higher interest payments may be a key factor.

Consequences of Rising Debt:

  • Debt Repayment & Financial Fragility: High debt burdens could make it difficult for people to repay loans, potentially causing financial problems in the future.

  • Reduced Consumption Demand: Debt payments and higher interest rates can leave people with less money to spend, impacting overall economic activity.

Recent Trends:

  • The gap between interest rates and income growth has narrowed, putting a strain on household finances.

  • The financial wealth-to-GDP ratio has declined, while debt-to-net-worth ratios have risen.

  • Private consumption expenditure growth has slowed down.

Macroeconomic Concerns:

  • Rising household debt and a shift towards financial assets could make the economy more fragile.

  • High-interest rates aimed at curbing inflation could exacerbate the debt burden and hinder growth.

  • The financialization of the economy (focus on financial markets over production) could lead to joblessness and instability.

The Authors' Viewpoint:

  • The current trends in household debt and asset composition pose a risk to long-term economic stability.

  • Policies need to address these issues to promote sustainable growth.

COMMENTS

Name

Amritsar,1,April 2024,301,Art & Culture,1,August 2023,251,Courses,7,Daily Current Affairs,48,December 2023,189,Disaster Management,2,Environment and Ecology,54,February 2024,228,Foundation Course,1,GDP,1,GEMS Club,1,GEMS Plus,1,Geography,67,Govt Schemes,2,GST,1,History,2,Home,3,IAS Booklist,1,Important News,71,Indian Economy,46,Indian History,2,Indian Polity,56,International Organisation,12,International Relations,58,Invasive Plant,1,January 2024,240,July 2023,281,June 2022,6,June 2023,268,March 2024,238,May 2022,17,May 2024,204,Mentorship,2,November 2023,169,October 2023,203,Places in News,2,Science & Technology,66,September 2023,205,UPSC CSE,111,
ltr
item
Learnerz IAS | Concept oriented UPSC Classes in Malayalam: India's Falling Household Savings: Causes and Concerns UPSC NOTE
India's Falling Household Savings: Causes and Concerns UPSC NOTE
https://lh7-us.googleusercontent.com/RXdGYdJvIvurfHUoQ1GcxK6Ca624IpatzqXtQSpqfpBnm7zQcaiGfK5_RGaUUeEn63N-X79LmXQi18LJrx4clJHX0H5TPklDT-yThP4yLyScQQguNLiL81K_WJqWuPUwr8QmZob_EPeOECA=s2048
https://lh7-us.googleusercontent.com/RXdGYdJvIvurfHUoQ1GcxK6Ca624IpatzqXtQSpqfpBnm7zQcaiGfK5_RGaUUeEn63N-X79LmXQi18LJrx4clJHX0H5TPklDT-yThP4yLyScQQguNLiL81K_WJqWuPUwr8QmZob_EPeOECA=s72-c
Learnerz IAS | Concept oriented UPSC Classes in Malayalam
https://www.learnerz.in/2024/04/indias-falling-household-savings-causes.html
https://www.learnerz.in/
https://www.learnerz.in/
https://www.learnerz.in/2024/04/indias-falling-household-savings-causes.html
true
4761292069385420868
UTF-8
Loaded All Posts Not found any posts VIEW ALL Readmore Reply Cancel reply Delete By Home PAGES POSTS View All RECOMMENDED FOR YOU LABEL ARCHIVE SEARCH ALL POSTS Not found any post match with your request Back Home Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sun Mon Tue Wed Thu Fri Sat January February March April May June July August September October November December Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec just now 1 minute ago $$1$$ minutes ago 1 hour ago $$1$$ hours ago Yesterday $$1$$ days ago $$1$$ weeks ago more than 5 weeks ago Followers Follow THIS PREMIUM CONTENT IS LOCKED STEP 1: Share to a social network STEP 2: Click the link on your social network Copy All Code Select All Code All codes were copied to your clipboard Can not copy the codes / texts, please press [CTRL]+[C] (or CMD+C with Mac) to copy Table of Content