Household Savings Expected to Increase in FY24: Report

New Delhi: According to Crisil Market Intelligence and Analytics, household savings are expected to increase in the fiscal year 2023-24. The report suggests a rebound in the overall savings rate, with households contributing significantly. Notably, household savings constitute 60% of the total savings in the economy.

Official data from the previous year revealed a significant drop in India’s net financial household savings rate to a 47-year low of 5.3% from 7.3% in FY22. This decline was attributed to households borrowing at a faster pace than saving since the onset of the pandemic.

The report highlights factors such as a push in retail credit by banks and a growing preference for borrowing, leading to a rise in household debt. However, household savings in physical assets have also increased post-pandemic.

Key indicators signalling an improvement in household savings include a rise in bank deposits growth to 13.5% in FY24 from 9.6% in the previous year, as well as an increase in mutual fund investments. Moreover, retail credit growth among banks slowed to 17.7% from 21% in FY23, while investments in real estate continued to rise.

Despite GDP growth, there has been a slowdown in private consumption in FY24, indicating a potential increase in household savings. Additionally, a narrowing current account deficit to 1% and an uptick in investments to 33.7% of GDP from 32.2% in FY23 suggest a case for higher savings in the overall economy.