Economic Survey: Reliable financial products can boost total savings
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Economic Survey: Reliable financial products can boost total savings

Last Updated: Wednesday, February 27, 2013, 18:34
 
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New Delhi: Reliable and easily accessible financial saving opportunities can help boost total savings and reduce attractiveness of alternatives like gold, the Economic Survey 2012-13 has said.

"A greater variety of reliable financial savings opportunities (such as inflation-indexed bonds) and relative ease of access to them could also help increasing the share of financial savings in total savings, reducing attractiveness of alternatives like gold," the Survey tabled in Parliament on Wednesday said.

It pointed out that acquisition of gold by households in the country tends to have a negative impact on savings and on household financial investments.

"Household savings will also have to be raised and the financial savings of the household sector are likely to improve with lower inflation, especially as the real rate of return on financial savings rises," it said.

In view of fall in gross capital formation and domestic savings during pre-crisis 2007-08 and 2011-12, increasing domestic savings is the fastest way of increasing investments without putting pressure on the current account balance, the Survey said.

The gross fixed capital formation has fallen by over 2 percentage points between pre-crisis 2007-08 and 2011-12 and the gross domestic savings have fallen by about 6 percentage points over the same period.

The Survey also said that a large part of the future increase in savings will have to come from increased public savings and this will entail gradually reducing the central government's fiscal deficit from 5.8 percent in 2011-12 to the 3 percent projected for 2016-17.

According to the data available, the gross domestic savings as percentage of Gross Domestic Product (GDP) at current prices came down to 30.8 percent in 2011-12 from 34 percent in the previous fiscal.

The household savings which constitutes three fourth of the total domestic savings was 22.2 percent of GDP in 2011-12 down from 23.5 percent from previous fiscal. Similarly the financial savings was 8 percent of GDP in 2011-12 down from 10.4 percent in 2010-11.

The public sector savings also remained low at 1.3 percent of GDP in 2011-12 compared to 2.6 percent in 2010-11. The private corporate sector savings also came down to 7.2 percent of GDP level from 7.9 percent in the previous fiscal.

However the saving in physical assets increased to 14.3 percent of GDP in 2011-12 from 13.1 percent in 2010-11. The private sector savings too were down at 29.5 percent 2011-12 from 31.5 percent in 2010-11.

PTI

First Published: Wednesday, February 27, 2013, 18:33

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