Push savings ,now

We  had chosen to hike key policy rates year after year to controlling inflation that  has sadly remained  untamed and we  steadily  lost growth.There is strong empirical relationship between growth and savings in a progressive economy.That savings is a function of income or that investment was driven by the “animal spirits”  or that savings was a “leakage” from the expenditure stream made up of consumption, investment, and government spending, is past validity.India's household savings, which have fueled growth over the last few years, have dropped from 11.63% of GDP in 2007-08 to 10% in '10-11 and to a 22 year low of 7.8 % in '11-12 .These levels do not portend well at all for the economy.

            What had given stability and strength to our economy till recently, is that around 70 percent of  the country’s  savings comes  from the  household  sector,yet  these  carry  rates of return that barely cover inflation which further eats into  disposable incomes. .Poor incentives  force savings towards physical assets like gold and land.Large savings  help   leverage capital that provide funds for investment and potential business  and so, economic growth.With the Central government now in transition, a formal budget that may or may not underscore savings is too far away .We  stand to lose vitally needed  time  for economic rebound There is a strong case for spurring savings in big way ,without any further delay .

            There is a narrow window  left for the   UPA-II  to immediately announce big ticket savings incentives.  Large scale  generation of savings while  favourably impacting inflation, would also enable the  RBI to start easing  key rates and a long overdue signal  to return to growth.