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

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Waning Business Confidence

Only a substantial step-up in savings and investments can ensure sustained growth.

A major constraint that has hobbled the efforts to accelerate growth has been the plateauing of savings and investments in the economy. Savings and investment rates had steadily gone up from around 10% of the gross domestic product (GDP) in the early 1950s to touch peak levels of close to 40% of the GDP at the time of the global financial crisis in 200708. However, it has plummeted and stagnated since then.

The most recent estimates show that the savings rate has slumped from the peak level of 37.8% of the GDP in 200708 to 30.2% in 202122, a decline of 7.6 percentage points. The fall in investment rates has been even sharper with the numbers going down from 39.8% of the GDP in 201011 to 31.4% in 202122, a decline of 8.4 percentage points over the period.

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Published On : 20th Jan, 2024

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