Fall in household savings leads decline in net financial savings
More Indians are borrowing to buy homes and are also spending more through credit cards.
Why so? Households are now borrowing more than ever before — so much so that individual leverage could emerge as a bigger concern than corporate leverage if job losses spread from one pocket of the economy to another in the current downtick.
More Indians are borrowing to buy homes and are also spending more through credit cards. They have also increased unsecured borrowing. While home loans have more than doubled during the period, unsecured lending has more than trebled.
Lower financial savings by households also find reflection in their shrinking share of gross national savings. According to the Economic Survey of FY19, gross savings have fallen about 60 basis points as a share of GDP in two years to 30.5 per cent in 2017-18. Household savings lead the decliners. That share contracted from as high as 23.6 per cent of GDP in 2011-12 to 17.2 per cent of GDP in 2017-18.