Trend Analysis of Household Savings in India

The role of household savings in India is multifaceted, serving as a primary source of investment capital. Household savings in India are categorised into financial and physical assets. Financial assets include currency, bank deposits, non-banking deposits, life insurance funds, provident & pension funds, shares and debentures (including mutual funds), claims on the government in the form of small savings, and units of UTI. However, physical assets include real estate, gold, and durable goods. The component of financial savings by Indian households has changed, and they are inclined towards the capital market from the traditional preference for bank deposits. This study aims to analyse the trend of household savings in India since 1952 and the trend in the composition of financial savings since 1972. Data has been taken from the Handbook of Statistics on Indian Economy 2023-24, published by the Reserve Bank of India, National Account Statistics 2007 and the Securities & Exchange Board of India (SEBI). Trends and patterns have been analysed using graphs. The result showed that the share of physical savings dominates household savings, but the proportion of financial savings has improved over the period. In the case of components of financial savings, bank deposits have consistently been the favoured tool for financial savings, exhibiting a mixed pattern; however, in recent years, they have shown a downward trajectory.