Do it yourself

 A visit to local fruit and vegetable market last evening was quite revealing. The summer seasonal fruits like muskmelon (Rs140/kg); safeda mango (Rs180/kg) and watermelon (Rs45/kg), mulberries (Rs350/kg) all appeared becoming unaffordable for common households. Even if we assume that it is still early season and the rates will correct in next few weeks, my experience is that peak season rates are usually not less than 50% of the early season rates. Similarly none of the seasonal vegetables was available less than Rs50/kg. An article in March Bulletin of RBI highlights that the rate of financial savings of household may have contracted to 10.4% of GDP in 2QFY21 from 21% in 1QFY21. It is also suspected that the household savings rate may have further declined in 3QFY21. The article reads that “The Covid-19-induced spike in household financial savings rate in Q1:2020-21 waned substantially in Q2 in a counter-seasonal manner. While households’ deposits and borrowings picked up, the...

For two years 2017 and 2018, the growth in Indian stock market was mostly attributed to the institutionalization of household financial savings, as investors increasingly turned to the professional fund managers for managing their money. The asset under management of mutual funds, portfolio managers, pension managers, ULIPs etc grew at highest rate. The regulators also supported the fancy campaign "Mutual Fund Sahi Hai!" Net inflows in domestic mutual funds quickly reached from sub Rs5000cr during summer of 2016 to Rs.20,000cr in autumn of 2017. The contribution through systematic investment plans (SIP) increased from Rs3000cr in April 2016 to over Rs8000cr by end 2018. The total asset under management of equity mutual funds had increased from ~Rs5trn in early 2017 to over Rs10trn by August 2018. In July 2020, the net inflows in mutual funds were negative.   The Economics Times, recently conducted a survey of investors to analyze the trend. The survey discovered th...