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Lockdown spurs household savings to decadal highs

Savings in physical assets like property and land saw a sharp decline to 10.2% of GNDI from 11.1%  while savings in valuables like gold and silver ornaments was flat at 0.2% of GNDI. 

Published: 28th May 2022 07:32 AM  |   Last Updated: 28th May 2022 08:16 AM   |  A+A-

Money, notes, fund, currency, funds

Image used for representational purpose only.

By Express News Service

MUMBAI:  Financial savings of the household sector – the most important source of funds – surged by 3.6 percentage points to 11.5% of gross national disposable income (GNDI) in FY21, the highest in over two decades, RBI’s annual report said.

The reduction in discretionary spending amidst the pandemic and the associated issues forced savings, as well as a surge in precautionary savings, on concerns relating to income flows in the near-term boosted saving by households.

Savings in the form of deposits saw the highest growth, rising to 6.3% of GNDI in FY21 from 4.2% in the preceding year. Investments in insurance funds also contributed to the jump, rising to 2.6% from 1.8% of GNDI. This was followed by savings in cash (1.9% of GNDI from 1.4%) and investments in provident and pension funds. 

“With avenues of investments largely closed during the lockdown, perforce money flowed into bank deposits and into the stock markets through insurance and pension funds,” said Madan Sabnavis , chief economist at Bank of Baroda.  

Savings in physical assets like property and land saw a sharp decline to 10.2% of GNDI from 11.1%  while savings in valuables like gold and silver ornaments was flat at 0.2% of GNDI. The rate of gross domestic saving had dropped to 27.8% of gross national disposable income (GNDI) in FY21 from 29.4% a year ago due to dissaving of the general government sector and a fall in saving of the non-financial corporations.

Savings in the form of deposits see highest growth
Savings in the form of deposits saw the highest growth, rising to 6.3% of GNDI in FY21 from 4.2% in the preceding year. Investments in insurance funds also contributed to the jump

Circulation of currency up 9% in FY22
New Delhi: The value of banknotes in circulation increased by 9.9%  during FY 22 as against 16.8% in FY21, the RBI said on Friday in its annual report. At Rs 31.05 lakh crore, the value of the currency is 13% of India’s GDP. During demonetisation in November 2016, the money in circulation was at Rs 17.74 lakh crore, so there has been a rise of 75% since then.In terms of volume, banknotes in circulation rose 5% in FY22 as against 7.2% in the previous year. This is the fourth straight year when RBI hasn’t printed a single note of Rs 2000. “In value terms, the share of Rs 500 and Rs 2000 currency accounted for 87.1% of total value of banknotes in as of March 31, 2022. ENS



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