India - Total Household Savings as a Percentage of the Household’s Annual Income..!

India - Total Household Savings as a Percentage of the Household’s Annual Income..!

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SEBI Investor Survey 2015

Figure 4.3: Total Household Savings as a Percentage of the Household’s Annual Income

Savings	Monthly Income
	Below Rs. 20,000	Rs. 20,000 - Rs. 50,000		Rs. 50000 - Rs. 1 Lakh		Above Rs.1 Lakh
< 40% of annual income	10569		8833		2920		5513
40%–60% of annual income	1506		3660		624		843
> 60% of annual income	341		771		143		569
Total	12416		13264		3687		6925

N = 36,756 (all urban respondents, SIS 2015)

To probe further into household indebtedness, the other side of the savings coin, we perform a similar analysis. In this case, the income-debt inverse linear relationship holds true – the higher the household income, the lower the debt levels drop.

Figure 4.4 confirms that 31% of low-income households (with monthly incomes less than Rs. 20,000) have debts larger than 60% of their annual income, whereas just 6% of Rs. 1 lakh+ households have matching debt levels.

However, contrasting the survey findings on savings, the higher income households have lower debts than the mid- income groups. Analogous to the low-income group, nearly a third of the mid-income group households are indebted at the 40% to 60% of income level.

With the rise of indebtedness in the middle class owing to the upsurge of credit instruments like credit cards, easier car loans, student loans and housing loans, this is a foreseeable outcome.

While high-income groups also show a comparable increase in the use of credit instruments, their elevated income levels possibly balance and thus, do not significantly affect their indebtedness ratios.

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