WORLD SAVINGS DAY: A REALITY CHECK ON INDIA'S DWINDLING HOUSEHOLD SAVINGS CRISIS

High inflation and easy credit lead to financial instability due to overspending and rising debt

- AJAY LAKHOTIA

While we observe the World Savings Day on 31 October, a core challenge comes to light: household savings rates continue to dwindle, against the backdrop of hard economic facts.

According to the National Account Statistics 2024 data released by the ministry of statistics and programme implementation (MoSPI), over the three-year period preceding 2022-23, net household savings in India plunged sharply by ₹9 trillion, standing at ₹14.16 trillion.

Therefore, the household savings ratio in India fell from 22.7% of GDP in FY21 to 18.4% in FY23. To protect individuals' wealth for the years to come, it is important to begin thinking about setting aside some emergency funds, investing in different ventures and learning how to properly handle personal debt.

Increasing costs and easy credit impacting financial security Based on the All-India Consumer Price Index (CPI), the country recorded a rise in the annual inflation rate to 5.49% in September 2024, as compared to 3.65% in the previous month. This high inflation and increased credit accessibility have reshaped the domain of personal finance.