Finance Ministry says no distress, household savings down because people are buying homes, vehicles. Attributes 46-year low savings rate in 2022-23 to changing preferences.
Banking & Finance
The Finance Ministry has dismissed “critical voices” about household savings in the country falling to a multi-decade low, arguing that households are now adding lesser financial assets than in the past because they have started taking loans to buy real assets such as homes and vehicles which is “not a sign of distress but of confidence in their future employment and income prospects”. Households were also being burdened with more financial liabilities, indicating a severe income crunch and post-pandemic rise in consumption due to pent- up demand. Financial liabilities of households shot up by 5.8% of GDP in 2022-23 as compared with 3.8% in 2021-22 which also indicated that part of the consumption was being financed by loans.
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