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Assam-What Kind of Election

saving has been rising at a fairly steady rate throughout the last quarter of a century, the pace quickening somewhat in the closing years of the period (ending 1979-80). Using three-yearly averages, it is pointed out that the gross rate of saving has more than doubled from less than 10 per cent of GDP in the early 1950s to over 22 per cent of GDP by the end of 1970s. The saving rate has registered increases in both public sector and private sector, but the most sustained increase has been in the household sector. And household saving in the form of financial assets has grown even more rapidly than that in the form of physical assets. The Working Group attributes this rise to (i) higher rates of profit secured through investment in small- scale manufacturing enterprises, transport and trade as well us real estate leading to higher rates of direct investment in the household sector; (ii) higher financial saving, including in the form of various schemes of compulsory deposits enforced by the government, as a consequence of the rapid growth of financial intermediation; and (iii) a significant shift in the commodity terms of trade against agriculture where the marginal propensity to save is considered lower. Some other developments also may have influenced the quickening of the rate of saving in the household sector : (i) over the four-year period 1975-76 to 1978-79 the average rate of increase of real income was as high as 6.5 per cent; and (ii) there was rapid expansion in the holdings of currency and bank deposits, attributable partly to larger procurement of grains in some years and sizeable foreign inward remittances by Indian expatriates. The domestic saving rate might have been still higher perhaps but for the sharp deterioration in the country's net terms of trade since 1973-74 which has had the effect of a sizeable transfer of real resources abroad.

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