The financial savings of an Indian household sector has moderated to 9.7% of GDP in 2010-11 from 12.1% in 2009-10, This was reflected in lower growth in their bank deposits, life insurance as well as decline in investment in shares and debentures.
Bank deposits that stood at Rs. 4,41,063 crore, constituting 60.7% to the total financial savings in 2008-09, fell to 47.3% in 2010-11.
On a similar note, provident and pension funds, which constituted 10.1% of the total savings, reduced to 9.1% in 2010-11. Households' financial liabilities increased, reflecting higher borrowings from banks.
The RBI stressed on the need to maintain a long term balance between consumption and investment by re balancing demand from consumption to investment by stepping up savings in the economy.
India's household savings, which have fuelled growth over the last few years, have dropped to below 10% of gross domestic product, or national income, for the first time in 13 years, as soaring inflation ate into disposable incomes.
The last time net financial savings as a percentage of GDP dipped below 10% was in 1997-98 when it fell to 9.6%.
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