What's behind a dramatic fall in Indian families' savings - BBC News

Indians, traditionally known as avid savers, are now stashing away less money and borrowing more.

12 hours agoShareclose panelShare pageCopy linkAbout sharingImage source, AFPImage caption, India is the world's fifth largest economy but faces the challenge of creating more and better jobsBy Soutik BiswasIndia correspondentFor decades, India has been a nation of savers. They stash away a significant portion of their earnings for future security, often at the expense of current consumption.

But something seems to be amiss now. Recent data from the Reserve Bank of India says India's net household savings stood at a 47-year-old low. Household net savings are the total money and investments families have, like deposits, stocks and bonus, minus any money they owe, like loans and debt.

Savings shrank to 5.3% of the gross domestic product (GDP) in the financial year 2023, down from 7.3% in 2022. One economist called this fall "dramatic".

There has also been a sharp jump in household debt in the same period. Annual borrowings stood at 5.8% of GDP - the second-highest level after the 1970s.

As households increasingly rely on debt to fuel consumption, their savings inevitably erode. The more they borrow, they dedicate more of their income to repaying debt, leaving less for savings.

https://www.bbc.co.uk/news/world-asia-india-68874403

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