Informal Sector Saving Potential

Informal Sector Saving Potential ARUN GHOSH not only writes from the ivory tower but also seems to be living in one. His observation (December 10, 1988) that informal sector savings "may not necessarily lead to any additional savings in the economy" seems to come from a highly insulated approach to the phenomena of saving mobilisation in the economy. This is not an uncommon approach, as a large proportion of academicians, researchers and policy-makers live and think in the exclusive world of the organised sector and rather simplistically assume that whatever savings are being presently mobilised by the organised sector's financial system represent all the savings in the economy. This approach has resulted in propagation of a saving mobilisation strategy that is structured to meet the saving needs of a small segment of the people who earn income on a regular basis, and generally people who can be motivated to save through tax-related fiscal stimulants.