A re-look at savings

Overall savings in the economy peaked to 36.82% of GDP in 2007-08,falling to 32.3% in 2010-11, Gross domestic savings in 2013-14 est,have since fallen  7.1 percent from its peak of 2007-08 .Having large resources in savings can provide more capital than itself as it can be used as collateral or security for loans, providing more funds for investment and potential business ventures and hence, growth.  Studies show  that higher growth generally tends to precede higher savings. Our enviably high savings rates have traditionally been  financing our economic push of the past two decades. What gives stability and strength to India’s position is that around 70 percent of the country’s savings comes from the household sector, that have since sadly dropped to below 10% of gross domestic product, for the first time in 13 years. Inflation eating into disposable incomes could be one factor and precisely why we ought to promote more savings to spur growth. That said ,savings must be channeled to investment not to underwrite expenditure.There could be attractive new look Infrastructure savings schemes  for domestic investors that  could be held in Escrow towards targeted set of projects.This closed system of funding while boosting savings per se can help endemic monitoring of specific projects for delays / cost over run.

Pub Fin Express; July 8