Low-interest rates drive Indian households towards physical assets, says SBI Ecowrap Report
₹8.2 trillion since the pandemic, outpacing the increase in gross financial savings at ₹6.7 trillion, thus explaining the fall in household net financial savings by ₹1.5 trillion / 2.5% of GDP. On the asset side of households, there was an increase of ₹4.1 trillion in insurance and provident and pension funds," SBI Report said.
It further added that there is a significant long-run relationship between housing loans and household savings in physical assets. It argued every Re 1 increase in housing loans has resulted in a ₹2.12 increase in household savings in physical assets for the 14-year period ended 2021-22.
“In fact, savings in physical assets which accounted for more than two-thirds of household savings in 2011-12, had declined to 48 per cent in 2021-21. However, the trend is again shifting and the share of physical assets is expected to reach 70 per cent level in 2022-23, due to a decline in the share of financial assets," the research report said.
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