According to a recent publication by RBI (Reserve Bank of India), the central bank of India; the rate of net financial savings of Indians’ have come down below 10% of GDP (Gross Domestic Product).
It was at 12% of GDP in 2010 while for 2011, the RBI figure is 9.7%. Stunningly this is the lowest level in last 15 years.
Economists and RBI official say sustained inflation in basic necessity products is the main culprit for this situation which is eating up extra into pockets of Indian consumers. They also believe once the inflation moderates, the savings rate should also improve again.
The financial savings of Indians’ includes cash, currencies, bank deposits, corporate of other type of deposits, shares debentures, mutual funds, life insurance, pension funds and other types of small savings schemes.
The RBI also said that there also has been an increase in household liabilities, mainly due to debt taken from commercial banks at higher rates.
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