Trends in Household Savings
In a recently published paper, RBI has highlighted some interesting trends in the financial savings of the Indian household. The financial savings of household are considered very important given that they are the key providers of the capital to the Indian economy. Household savings have traditionally financed the fiscal deficit of the governments and also provided a stable source of short to midterm funding to the corporates. Study of trends in household finances is therefore considered most important to understand the growth dynamics of Indian economy. The key highlights of the paper could be listed as follows: 1. The net household savings declined to 6.5% of GDP in FY19 from 7.7% in FY18. This was mostly due to higher household expenditure and larger borrowings. In FY20 net savings have rebounded to 7.7%, mainly due to sharp decline in financial liabilities of households. 2. Gross financial assets of India...