Indians are now investing more in the stock market, saving in the bank is becoming less common!

Household Savings: Household savings contribute 70 percent of the country’s total household savings. Household savings are the largest source of investment in India. According to a report, India is witnessing a major change in terms of financial savings. After coming out of bank or non-bank deposits, people have started investing in the stock market. In 2001, bank or non-bank financial savings accounted for 39 percent of total savings and capital market savings accounted for 4 percent. It has been 37 percent and 7 percent in FY 2022-23. Life insurance, provident fund due to increase in financial literacy. Savings in pension fund increased from 34 per cent in 2000-01 to 40 per cent in 2022-23.

According to a research paper by BofA Securities, household savings are the largest source of investment in India. According to the report, domestic savings were at a high level of 37.8 percent of GDP in FY 2006-07, while investment was at 39.8 percent of GDP in FY 2010-11, which was the highest level. But after that both domestic saving and investment declined. In 2021-22, the DGP’s savings rate declined to 30.2 percent while investment was 31.4 percent, showing a modest recovery from the lows.

In FY 2021-22, domestic savings in financial assets stood at Rs 28 lakh crore, double the amount of Rs 14 lakh crore in 2011-12. On an average, an Indian invests 77 percent of his household savings in real estate, 7 percent in durable goods including transport vehicles, livestock and poultry, and machinery. People invest 11% of their savings in gold. The share of household savings in physical savings was 69 per cent in 2011-12, which has declined to 49 per cent in 2020-21. However, in 2021-22 it has increased to 61%. BofA Global Research estimates that this could increase in 2022-23. According to the report, household savings in 2022-23 are expected to be higher than 2021-22.

According to the report, household financial savings of Indians are still very weak. Financial assets include currency, bank and non-bank deposits, life insurance funds, pension and provident funds, shares, debentures and government liabilities. Apart from house, physical savings include vehicles, machinery, gold and other ornaments.

Household savings are mainly divided into financial and physical assets, with financial savings accounting for 56 percent, while physical assets account for 44 percent. Bank and non-bank deposits account for 37 percent of financial savings, while 8 percent is held in shares and debentures. 77% of physical savings go into real estate sector while 11% goes into savings by buying gold.

Also read this

Tax demand waived: Modi government gave a big relief to one crore taxpayers, tax demand up to one lakh rupees waived!



Leave a Comment