Jobs & infra creation to boost household savings: Finance Ministry

The government’s focus on ease of doing business, skilling, employment generation and infrastructure creation “creates a congenial environment for growth of household income and saving”, Minister of state for finance Pankaj Chaudhary said on Tuesday, amid a drop in the household savings ratio.In a written reply in the Rajya Sabha, Chaudhary acknowledged the decline in household savings to 18.4% of gross domestic product (GDP) in FY23, against 20.1% in FY22.

Prior to that, the household savings went up to 22.7% of GDP in FY21 from 19.1% in FY20, mainly as people resorted to precautionary savings in the wake of the pandemic and spending avenues remained limited due to lockdowns and other curbs.

Meanwhile, personal loans offtake rose 20.7% on year in FY23 from 13.7% a year before, driven partly by a 24% jump in vehicle loans, Chaudhary said.

Last year, the finance ministry had said the drop in household financial savings as a share of GDP in FY23 was mainly due to a shift in consumer preference towards financial products such as real estate and automobiles.

The stock of household gross financial assets rose 37.6% between June 2020 and March 2023, while that of household gross financial liabilities went up by 42.6%. So, there was “no big difference between the two”, it had said, rejecting any notion of a household distress.