HouseHold Savings in India Hit a 22 Year Low – Courtesy High Inflation + Bad Governance

It is a matter of great concern that Indian Household savings in Financial Products hit a 22 Year Low due to sustained High Inflation and Poor Governance of the Dr. Manmohan Singh Government embroiled in the Greatest Corruption scandals in the World.

This shift in composition is not surprising. In a continuously 3 year high inflation environment, low real returns deter financial savings (as consumption is front-loaded); instead, savings in physical assets rise as an inflation hedge.

The Following chart Shows Historical HouseHold Savings in India as %ge of GDP

Break-up of domestic savings data is not available. However, using close proxies, we estimate that household physical savings [Gold, Real Estate, etc] have hit an all-time high, leaving aggregate household savings rate
largely unchanged.

Lower financial savings are a negative for an investment-starved economy like India as they reduce the amount of investible funds available to finance domestic investment, thereby increasing the dependence on foreign capital.

2 thoughts on “HouseHold Savings in India Hit a 22 Year Low – Courtesy High Inflation + Bad Governance

  1. Just not the government the main issue is corporate governance. Many of the private companies (including our top most company) have policy of cheating government and make profit; this is not just happened in the last decade it happens for more than 3 decade visibly.

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