World Savings Day: A reality check on household savings
Subscribe to enjoy similar stories. As World Savings Day is celebrated, a pressing concern comes to the forefront—household savings rates in India are declining amid tough economic realities. According to the National Account Statistics 2024 from the Ministry of Statistics and Programme Implementation (MoSPI), net household savings dropped a massive ₹9 trillion over the three years leading to FY23, now standing at ₹14.16 trillion.
Consequently, the household savings ratio fell from 22.7% of GDP in FY21 to 18.4% in FY23. Read this | Mint Explainer: What plummeting household savings mean for the economy Safeguarding individual wealth requires proactive measures—starting with building emergency funds, diversifying investments, and managing personal debt effectively. India’s annual inflation rate surged to 5.49% in September from 3.65% the previous month, based on Consumer Price Index (CPI).
Rising inflation, coupled with increased credit accessibility, has redefined personal financial habits. With easy access to loans and credit cards, many individuals assume savings are unnecessary. As of March 2023, unsecured personal loans grew more than fourfold to ₹13.32 trillion, compared to ₹4.26 trillion in March 2017, according to the CareEdge Rating Report.
This false sense of security often leads to overspending and a cycle of debt, shifting focus away from the importance of saving for future needs. More here | Indian banks are staring at worrisome savings and investment trends Savings act as a financial cushion, providing resilience during unexpected economic downturns or emergencies. Without adequate savings, individuals are forced to rely on loans, incurring high costs to cover unforeseen expenses.
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