BackHouseholds saved less in financial products last fiscal
Annual net financial saving of household sector has been coming down in the past three fiscal years
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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.
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