Low household savings due to high consumer spending, says FinMin

THE government has refuted claims of distress after a recent RBI data showed the net household financial savings have fallen to a 50-year low of 5.1% in 2022-23. In a clarification issued on Thursday, the finance ministry said the fall in household savings is because of higher borrowings for purchase of real estate and vehicles.

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"Changing consumer preference for different financial products is the real reason for fall in household savings and that there is no distress as is being circulated in some circles," read a statement. The ministry added that the concern over the drop in net household savings is unwarranted as the figures cited are 'flow' numbers (or net additions in FY23), and that the overall household savings remain almost static.