corona epidemic Since then, there has been a rapid increase in the prices of houses and cars in the country. This has affected the savings of common people. People are buying houses and cars to fulfill their wishes but due to this their savings are falling rapidly. Let us tell you that domestic savings have declined for the third consecutive year in the financial year 2023-24. According to the latest National Accounts Statistics-2024 released by the Ministry of Statistics and Program Implementation, net domestic savings declined by Rs 9 lakh crore to Rs 14.16 lakh crore in the three years to 2022-23. Economists say that liabilities have increased due to rising interest on home loans and car loans. Due to this, people’s savings have reduced.
The decline in savings is expected to continue
Talking about the data, ICRA Chief Economist Aditi Nair said that the main reason for the decline in household savings in 2022-23 was the 73 percent increase in liabilities on an annual basis. He said that if we look at the data, the trend of decline in household savings is expected to continue in the last financial year 2023-24 also. Data related to household savings has not been released yet. However, this trend may reverse in 2024-25 as the Reserve Bank of India has taken steps to curb unsecured personal loans, Nair said.
Investing in shares and mutual funds
Chief Economic Advisor V. Ananth Nageswaran attributed the decline to a shift in the segment, where savings are being channeled into real assets. “Domestic net financial savings remained low in FY 2022-23 and there were some concerns about it,” he said at an event organized by NCAER here. This showed that household savings were coming down, but actually it was a segment shift where savings were going into real assets.” Common people are now investing directly in shares and mutual funds instead of small savings schemes.
Domestic savings had reached record level
Household savings had reached a record level of Rs 23.29 lakh crore in the financial year 2020-21. The second wave of Covid-19 came that year. However, it has continued to decline since then. After this it came to Rs 17.12 lakh crore in 2021-22 and Rs 14.16 lakh crore in 2022-23. Loan given to households by financial bodies and NBFCs to quadruple to Rs 3.33 lakh crore in 2022-23. It was Rs 93,723 crore in 2020-21. It increased by 73 percent in 2022-23 compared to Rs 1.92 lakh crore of debt in financial year 2021-22.
In view of the increase in personal loans, RBI had changed the provisions for unsecured loans, including personal loans, in November last year.
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