Indian household savings may have rebounded in FY24, says Crisil

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Our post-pandemic slump in household savings should disappoint but not alarm us A current account deficit occurs when the total value of goods and services a country imports exceeds the total value of goods and services it exports. "Bank deposits, which constitute the largest chunk of gross financial savings, grew 13.5% in fiscal year 2024, compared with 9.6% in the previous year. Bank deposits also grew faster than the 9.1% nominal GDP growth in fiscal 2024," the report said.

"Mutual fund investments by households have grown at a faster rate in fiscal 2024 compared with the recent past. Investments through systematic investment plans (SIPs), mostly opted by individuals in the country, continued to rise in fiscal 2024," it added. Bank retail credit growth remained relatively high at 17.7% in FY24, though down from 21% in FY23, it added.

Also read: There’s much ado about a decline in India’s household savings rate Crisil said that while Indian households continued to invest in real estate in FY24, a slowdown in private consumption during the fiscal year, despite high GDP growth, hinted at increased household savings. "Early indicators are that overall household savings likely rose and contributed to higher total savings in fiscal year 2024," it said. "The expectations of rate cuts have been pushed ahead amid inflation risks and buoyant growth.

Further, the transmission of the RBI’s past rate hikes could encourage households to increase their savings," the report added. According to the latest data from the ministry of statistics, net household savings declined sharply by ₹9 trillion to ₹14.16 trillion in the three years to FY23. Overall, India’s household savings rate has fallen from 22.7% of GDP in FY21 to 18.4% in FY23.