The Reserve Bank of India’s (RBI’s) annual report shows the annual net financial saving of household sector has been coming down in the past three fiscal years. In 2011-12, for instance, RBI data shows there have been withdrawals from mutual funds to the tune of 10,620 crore. Investment in small savings has declined even more during the year, by 22,030 crore. Bank deposits, however, have continued to show healthy growth. The data also shows household savings in physical assets—real estate and gold—have increased sharply, as people saw them as a hedge against rampant inflation.

Incidentally, the accretion to household liabilities, too, was lower in 2011-12 compared with the previous fiscal. However, the increase in financial liabilities, which accounted for 20.6% of the increase in household financial assets in 2009-10, moved up to 28.3% in 2011-12. That indicates households are borrowing more as a proportion of their assets.