Indians' savings fall, debt rises 38%

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MUMBAI: Countries around the world are battling savings and spending during the Corona epidemic. A report released by the Central Bank of India warns that India's household debt is on the rise and the opposition's savings are also steadily declining.

According to preliminary estimates released by the Reserve Bank of India (RBI), household financial savings declined for the second consecutive quarter in the third quarter of FY 2021-21 to 7.5% of GDP. In the previous two quarters, the savings-to-GDP ratio has been steadily declining from a peak of 31% and 10.6% respectively.

During the second quarter of the last financial year 2015-2020, household savings remained stable at 7.1%. The RBI report found a decline in people's savings due to declining financial resources and rising debt.

Domestic debt is also on the rise. The debt-to-GDP ratio, based on selected financial instruments, has been steadily rising since March 2016. It has risen to a record level of 6.4% at the end of December, 2020, compared to 5.1% in September, 2020.

The shocking figure is that in the third quarter, domestic (bank) deposits accounted for 4% of GDP, up from 7.5% in the quarter. The reduction in interest rates and the ongoing fraud with banks has led to a decline in public confidence in banks as deposits and deposits have been withdrawn by the public.

The RBI said that despite higher borrowings from banks and housing finance companies, household financial liabilities declined modestly in the third quarter of FY2021-21. The decline was mainly due to lower borrowings from non-banking financial companies.


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