The southward movement of interest rates has lowered the flow of household savings into life insurance, provident and pension funds in 2000-01.
The Reserve Bank of India in its annual report said household savings in the form of contractual instruments like life insurance, PF, etc declined to 4.1 per cent in 2001-02 from 4.3 per cent in the pervious year, partly reflecting the lowering of the rate of returns on these instruments.
The report added that the rate of household financial savings was at 10.9 in 2001-02 as against the revised estimates of 10.8 per cent in 2000-01. The marginal rise in household savings is attributed to currency and claims on the government held by the household sector.
The rate of household financial savings in non-bank deposits has declined to 4.9 per cent from 5 per cent in 2001-02 while household savings in the form of bank deposits increased to 4.8 per cent (4.5 per cent) in the period.
The ratio of gross domestic savings as a percentage of GDP increased to 23.4 per cent in 2000-01 from 23.2 per cent in the previous year. All the constituent sectors posted improved savings rate except for the public sector which increased its
