Household savings at 50-year low but plateauing assets pose bigger problem
- While falling household savings are the flipside of India's consumption-driven GDP growth, what’s distressing is that the share of gross financial assets in GDP has not shown a corresponding increase
Net financial savings (NFS) of households – or the difference between household financial asset and liability flows as a share of gross domestic product (GDP) – fell to almost a five-decade low in the previous financial year. This is cause for serious concern. According to the Reserve Bank of India’s (RBI) estimates on ‘Flow of Financial Assets and Liabilities of Households’ in its September Monthly Bulletin, released on Monday, NFS was down from 11.5% of GDP in FY21 to 5.1% in FY23.