Nuances of household savings

If corporate investment starts rising, pushing the investment rate (as a percentage of GDP) higher, low NFS will be hard to ignore and likely to hamper a balanced surge in growth

Household (HH) savings in India consist of two parts — net financial savings (NFS) and physical savings. HH NFS is arrived at after deducting financial liabilities (known as annual borrowing) from gross financial savings (GFS). GFS includes seven key areas: Currencies; deposits (bank and non-bank); insurance; provident and pension funds (P&PF), including the public provident fund (PPF); shares and debentures (S&D); claims on government (small savings); and others. HH physical savings primarily constitute residential real estate (accounting for about two-thirds) and machinery and equipment (owned by producers within the HH sector).

Three key trends have emerged within HH savings in recent