Let Granular Data on Household Savings Supplement Macro Data

Indepth surveys can capture below-the-radar information and help craft strategies to serve India's financial inclusion agenda

- RAJESH SHUKLA

Understanding household saving behaviour is essential to evaluate a country's financial resilience and potential for inclusive growth. Savings not only provide a safety net for individuals, but also fuel investment and stabilize consumption—vital functions in an emerging economy like India.

Although macroeconomic data from institutions such as the Reserve Bank of India and the ministry of statistics and programme implementation offers national-level estimates of household financial savings, they primarily capture formal instruments like bank deposits, insurance and pension funds. This narrow scope fails to reflect informal savings, which characterize much Indian household behaviour.

According to the ICE 360° Survey (2023) conducted by People Research on India's Consumer Economy (PRICE), informal and non-institutional mechanisms such as cash holdings, gold and peer-to-peer lending constitute nearly one-third of total household savings in India. These forms of saving are especially prevalent among low- and middle-income households, particularly in rural areas, where income is often irregular, transactions are small and people's access to formal financial services is limited.

Such realities are under-represented in administrative data-sets, which can lead to significant underestimation of both the volume and nature of household savings.

Beyond quantifying savings, the ICE 360° Survey reveals stark structural disparities. The top 20% of the population (Q5) command 46.8% of total household income and hold 45.8% of total savings, underscoring the sharp concentration of financial power in India. In contrast, the bottom 20% (Q1) earn just 6% of income and hold only 5.5% of savings.