India savings rate at 15-year low |
Indian households tend to save a lot for their future activities like weddings or big family vacations but India`s slowing economy has taken a toll on the much needed savings too, with the savings rate touching a 15-year low, and household savings also falling. This has weakened India`s macroeconomic position which is already hobbled by low investment and rising external borrowing to fund capital needs. Household savings declined as consumers spent more in purchasing durables and travelling. Indian households contribute to about 60 percent of the country`s savings. But India remains favourable compared to emerging market peers such as Brazil. Data from the Central Statistical Organisation shows that India`s gross savings fell to 30.1 per cent of the gross domestic product in fiscal 2019 from 34.6 percent in fiscal 2012, and 36 percent in 2007-08. The previous low was 29 percent in 2003-2004. As a percent of GDP, household savings fell from 23 percent in 2012, to 18 percent last year. A falling savings rate could lead to Indian companies ending up borrowing more from overseas markets, weakening India`s external position as it would raise India`s external debt.
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