Key Points
India's net household financial savings have witnessed a sharp decline in FY23, compared to previous years..
Recent data from the Reserve Bank of India (RBI) bulletin, released in September 2023, reveals that India's net household financial savings, encompassing bank savings, cash, and investments, declined to 5.1 per cent of the Gross Domestic Product (GDP) in FY23, down from 7.1 per cent in FY20-21...
While higher spending on physical assets has led to a sharp rise in financial liabilities among Indian households, an analysis by SBI Research argued that household savings must be looked into as a sum total of physical and financial savings...
The report noted that a low-interest regime resulted in a paradigm shift of household financial savings to household physical savings in the last two years...
Simply put, financial savings among Indian households have declined drastically, but thats solely because of higher spending on the creation of physical assets, especially with the recovery in the real estate sector and the increase in property prices...
