Household financial savings improve on sharp decline in borrowings: RBI

Savings more precautionary than productive, consumer demand unlikely to improve soon

In a year when the economy grew the slowest in 11 years, Indian households bolstered their net financial savings by sharply reducing their borrowings, preliminary data released by Reserve Bank of India in its annual report show. 

Net financial savings of households stood at 7.6 per cent of the disposable income in the country in 2019-20. This is a significant jump from 6.4 per cent in 2018-19, which was lowest since 2011-12. 

The apparent improvement, however, masks the nature of these savings. Most of these are of precautionary nature, stemming from an aversion to spend, rather than from increased incomes,