The fall in savings rate from 38.1 per cent in 2008 to 31.3 per cent in 2011-12 and subsequently at 30.1 per cent in 2012-13 has undercut the very basis of growth in India and further worsened the matters since a major shift was noticed in composition of household savings from financial to physical assets., points out the Chamber's assessment.
The hiatus between financial and physical savings presently is estimated as the widest in the last 13 years and is widely responsible to spurring up bullion imports, especially that of gold and partly accountable for rising inflation not in current context but certainly in the recent past, said Executive Director PHD Chamber Mr Saurabh Sanyal.
Releasing its findings, Mr Sanyal added that households savings make the highest savings source followed by private and public corporates which fell from 22.8 per cent of national GDP in 2011-12 to 21.9 per cent in 2012-13. The private sector's savings fell at 7.1 per cent in 2012-13 from 7.3 per cent in the previous year. The public sector savings stayed stagnated at 1.2 per cent during the period though it was at 2.3 per cent of national GDP way back in 2004-05 and slipped at 1.2 per cent in 2012-13.
Stagnant policy decisions beginning from 2009 onwards prevented investments until 2012 -2013 and hurt manufacturing so much as to push factory out put in negative zone for quire some time barring January 2014, but the declining savings rates stemming out of rising inflation also hurt growth, demand and consumption and stoked pessimism in Indian economy, further high lights the assessment of the PHD Chamber.
Lower savings rates also amounted from host of factors such as multiple increase in government expenditure. Thus the new government ought to initiate prudent economic measures so that the savings rates are brought back at over 38 per cent level to enable India rise on growth path that can take care of sagging economy, concluded the analysis of the Chamber.
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