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

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Savings Rate in Indian Economy since 1991

Pulapre Balakrishnan It has been widely noted that the estimated household saving rate has declined for almost three years running since 1991. This has been interpreted variously. The government of India has rushed to argue that the 'measured' decline might only reflect a methodological practice. On the other hand, critics of the reform process have argued that the decline is not only real but a direct consequence of the strategy adopted which has encouraged increased consumption of durable goods.

Economic Reform and Rate of Saving

EPW Research Foundation The latest CSO data show an improvement in domestic saving and investment in 1993-94 and 1994-95, but an examination of the sources of that improvement and the later sharp reduction in the financial saving of the household sector during 1995-96, despite two years of accelerated GDP growth and high interest rates, as brought out by the Reserve Bank of India's latest estimates, suggests that no clear upward trend in saving and capital formation has emerged yet.
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