PremiumHousehold financial savings fell for the second consecutive quarter to 8.2% of the gross domestic product in the third quarter of fiscal year 2020-21, according to the preliminary estimates released by the Reserve Bank of India. The savings moderated from a peak of 21% and 10.4% during the previous two quarters, respectively.
The household savings during the second quarter of the previous fiscal 2019-2020 stood flat at 8.1%. The decline in savings was due to a significant weakening in the flow of household financial assets, which more than offset the moderation in the flow of household financial liabilities.
The ratio of household (bank) deposits to GDP declined to 3% in the third quarter from 7.7% in the previous quarter.
“Despite higher borrowings from banks and housing finance companies, the flow in household financial liabilities was marginally lower in Q3FY21 following a marked decline in borrowings from non-banking financial companies," said RBI.
Meanwhile, the household debt to GDP ratio, which is based on select financial instruments, has been increasing steadily since end-March 2019. It rose sharply to 37.9% at end-December 2020 from 37.1% at end-September 2020.
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