Potential of rural savings and income in J &K

From the classical days, saving has been considered as one of the determinants of growth.

- PROF. K.S CHANDRASEKAR

In the Indian economy, the household sector contributes the lion's share of the total savings. In the household sector, rural households have tremendous saving potential which has not been considered seriously by the policy makers and hence, measures have not been chartered to mobilise these huge savings.

Jammu and Kashmir is projected to grow at 7.06 per cent in real terms, while the nominal Gross State Domestic Product (GSDP) is expected to rise at 11.19 per cent in 2024-25, according to the Economic Survey Report (ESR) for 2025. The per capita income (PPP) of Jammu and Kashmir (J&K) for 2024-25 is estimated to be ₹1, 54,703 below the national average but at the same time, it is found that the rate of savings is very high. There are various factors influencing the saving behaviour of the rural household sector in Jammu and Kashmir.

Level of income, income inequalities, value of assets and level of education of the head of the household positively influence savings whereas number of male children, number of earners and dependency ratio has an influence. Among the occupational groups, households engaged in non-farm sector have higher propensity to save. This fact is supported by studies highlighting lower labour productivity and investment rates in the agricultural sector compared to the non-farm sector.In the era of increasing international financial integration, the high saving potential in the rural household sector should be mobilised by proper policy measures to give stability to the economy. Identification of determinants of savings will help in framing policies accordingly.