Financial savings up 14% in absolute terms, says Patra

Financial savings in absolute terms increased by 14 per cent in 2023, the Reserve Bank of India Deputy Governor Michael Patra said in the post-policy press conference.

Patra also mentioned that households are shifting from financial savings to physical savings.

“The absolute level of savings rose by 14 per cent in 2023. There has been an increase in financial liabilities of households. If you observe where these liabilities are being directed, they are mostly towards housing. Households are shifting from financial saving to physical savings. When they make this shift, they contribute to investment; the physical part of savings goes directly into investment. So, in the next year, you will observe an uptick in investment,” Patra said.

Net financial savings of households fell to a 50-year low, reaching 5.1 per cent of gross domestic product (GDP) in financial year 2023 (FY23) compared to 7.2 per cent in FY22, according to data from the Reserve Bank of India (RBI).

Furthermore, annual financial liabilities of households rose to 5.8 per cent of GDP in FY23 compared with 3.8 per cent in FY22.