Mumbai: There are signs of significant improvement with net domestic financial savings at 7.30 per cent of gross domestic product (GDP) in the first half of the current financial year. Net monetary domestic savings remained at a 47-year low of 5 per cent of GDP in FY2023, improving to 5.30 per cent in FY2024.
The level of savings has almost doubled in the first six months of the current financial year compared to the first six months of FY 2024.
An increase in domestic savings is positive for the country’s economy, as it prevents domestic industries and the government from looking to other sources for needed funds.
During the Corona period, the total financial savings of the country was seen to be 51.70 percent of the GDP, but in the subsequent period i.e. in the financial year 2022, it decreased to 36.10 percent and in the financial year 2023 it decreased. Was 28.50 percent.
Total financial savings include government savings, household savings and corporate savings.
A report by a research firm states that the reason for the increase in household savings in the first half of the current financial year is the reduction in the burden of personal debt. The debt level in the first half of FY 2024 was 6.90 percent of GDP, which is expected to reduce to 4.70 percent in the first half of the current financial year.
Apart from RBI’s strict rules on unsecured personal loans, rules on lending by banks to non-banking financial companies are believed to have boosted household savings.
Total fiscal savings were 11.60 per cent of GDP in FY2024 but this gain got wiped out due to high debt burden. The report said that gross fiscal savings are being seen higher due to savings in insurance products and strong investment in capital markets.
