Savings fund growth

India’s economic push of the past two decades are largely due to our savings rate that is higher than that of several countries with AAA rating.I But of late, India's household savings  had  dropped to below 10% of GDP, for the first time in 13 years.Moreover, the financial savings of the nation, mostly government owned , are deployed inefficiently. They often provide an average rate of return that barely covers the inflation rate. The government grabs these savings which are supposed to fund healthcare, primary education and old age, to use them in unproductive populist  schemes.On the other hand , even as the much vaunted foreign direct investment and portfolio investments constitute just 5% of nation's gross savings, there is a disproportionate stress to attract external money flow. . It is heartening that the nation is today,re learning the values of savings ,that too  in the more productive and growth enabling mutual funds. A renewed push for savings is overdue.Studies show that growth and savings have a symbiotic relationship.

 ( Published Economic Times ,June 13 )