India is the fastest growing economy in the world. The Indian economy continues to perform well in the global economy among the upheaval. However, people are now focusing less on savings. This change in the habit of savings among people is not good for the economy. It can cause problems in the long term. This information has been received from new data from RBI’s savings.
Savings’ stake in GDP decreased to 5.3%
In the financial year 2022-2023, Net Savings’ share of families fell to 5.3 per cent in GDP. This is the lowest in the last 50 years. A decade ago, the gross domestic savings rate was 34.6 per cent, which declined to 29.7 per cent in the financial year 2022-023. This is not just a decrease in data, but it tells about the changes in the habit and thinking of the people.
RBI gunwarr has expressed concern over declining savings
Reserve Bank Governor Sanjay Malhotra recently expressed concern about this. He had said that this is time to think about changes in the rules, as people are no longer showing interest in traditional bank deposits for savings. In the last 9 years, the share of people’s savings in bank deposits has come down from 43 per cent to 35 per cent. The declining focus of families on savings is not good for them.
Many reasons for decreasing interest in savings
Experts say that there may be many reasons for people’s low interest in savings. There is a new India in front of today’s youth. There is no dearth of occasions in this. The use of technology is increasing rapidly. People’s interest in spending is increasing. Mobile apps and digital platforms are promoting consumerism. Schemes like zero-interest EMI and ‘Bay Now, Pay Letter’ are available. Personal loan money comes into a savings account.
Good savings are important for these reasons
Savings are not only necessary for individual and family but it is the basis of national investment. For decades, India has been using domestic savings money to invest on infrastructure, startups and industry. However, due to the reduction of savings, the dependence of the government is increasing on foreign capital. Between 2007 and 2019, India’s investment rate declined from 41.9 per cent to 30.9 per cent. This indicates a decrease in savings of families.
The effect of change in saving habit is also on banks
Banks are facing problems due to decrease in deposit. They have to raise more costs to give loans for business, industry and infrastructure. FY24 recorded a decrease in savings of families for the third consecutive year. This decreased to 18.1 per cent of GDP, while financial liabilities increased to 6.2 per cent. If this trend continues, it can become a bubble of debt -based consumption. Due to this, families may face problems in future.