India's household savings to grow by 23% in FY21: SBI
Covid-19 related restrictions are behind the spike, think experts
Gross household savings is set to grow by 23% to Rs 28.2 trillion in FY21, State Bank of India estimate shows. At the same time net household savings is also supposed to go up to Rs 22.4 trillion in FY21 from Rs 16.1 trillion in FY20, the SBI report based on RBI annual report states. Experts think the rise is substantially triggered by the pandemic that has made the common man circumspect about discretionary spending and save for the rainy day.
Latest data
According to a research report of SBI based on the FY21 annual report of RBI, between FY17 and FY19, gross savings figure stood at Rs 16.2 trillion (FY17), Rs 20.6 trillion (FY18) and Rs 21.3 trillion (FY19).
Net household savings in FY21 stood at Rs 22.5 trillion which was a good 28% jump over the Rs 16 trillion figure over FY20. This is also the biggest leap in the recent past.
Between FY17 to FY19, net household savings stood at Rs 11.5 trillion (FY17), Rs 13.2 trillion (FY18) and Rs 13.6 trillion (FY19).`
Household savings
Household financial savings refers to currency, bank deposits, securities, mutual funds, pension funds, insurance etc apart from investments in small savings schemes.
The total savings is referred to as gross household financial savings.
What remains after subtracting liabilities, including loans from banks, NBFCs and housing finance companies, from gross savings are known as net household financial savings.
11.2% of GDP
In FY21, net saving rose from 7.8% of GDP in FY20 to 11.2% in FY21.
“Net household financial savings rose from 7.1% of GDP in FY19 to 7.8% in FY20. Now this will rise further to 11.2% in FY21, this is huge,” wrote Soumya Kanti Ghosh, Chief Economic Adviser, State Bank of India.
All-round growth
All the sectors of savings grew in FY21, revealed RBI data.
The lowest growth was recorded by pension funds that grew by Rs 0.1 trillion over FY20.
All deposits, term and otherwise, grew by almost Rs 2 trillion compared to the previous financial year – from Rs 8.6 trillion (FY20) to Rs 10.6 trillion (FY21).
Savings in FY21 under currency deposit stood at Rs 4.7 trillion (Rs 2.9 trillion in FY20), PF and pension funds stood at Rs 4.6 trillion (Rs 4.55 in FY20), insurance funds was at Rs 4 trillion (Rs 3.1 trillion in FY20), government bonds had Rs 3 trillion (Rs 2.7 trillion in FY20) and share markets accounted for Rs 1.3 trillion (Rs 0.85 trillion in FY20).