ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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From 50 Years Ago: Saving:How Much?

Weekly Notes from Volume XIII, No. 37, September 16, 1961.

…information about how much is saved, by whom and in what form isremarkably scanty …The Reserve Bank’s estimate of saving for the period 1950-51 to 1957-58...fill(ed) a major gap in our economic intelligence. …saving at constant (1948-49) prices increased from Rs 591 crores in 1950-51 to Rs 902 crores in 1958-59 or, as a proportion of national in-come, from 6.7 per cent to 7.7 per cent…the aggregate saving-income rate increased from 5.9 in period I (1950-51 to 1952-53) to 7.3 in period II (1953-54 to 1955-56) but then it rose only insignificantly in period III (1956-57 to 1958-59) to 7.9. The marginal saving-income ratio actually declined from 19.1 per cent in period II to 14.2 in period III. This is explained as being due to the fact that in period III, rep-resenting the first three years of the Second Plan, large investments of a capital-intensive nature were made and in view of the long gestation period of such investments, they did not immediately lead to any rise in output. This it is argued, shift(ed) the distribution of incomes in favour of wage and salary-earners and against profit-earners, as profits in the new projects could not have been very large during the preliminary phase of these projects. Since the marginal propensity to save out of wage and salary incomes is lower than that out of profit incomes, (it) reduce(d) the overall marginal rate of saving. The ex-planation…cannot however be accepted as more than a hunch…

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