Gross domestic savings as a proportion to GDP fell from a high of 36.8 percent in FY08 to 30.8 percent in FY13, according to the Reserve Bank.
Mumbai: Gross domestic savings as a proportion to GDP fell from a high of 36.8 percent in FY08 to 30.8 percent in FY13, according to the Reserve Bank.
The apex bank, in its half-yearly Financial Stability Report (FSR) released on Thursday, blamed the sharp fall in domestic savings on the steep decline in financial savings of households which dropped from 11.6 percent of GDP in FY08 to a poor 8 percent in FY13.
The report noted that the investor shift from financial assets to real estate and gold has been stark.
High inflation, which hovered over 8 per cent last fiscal, low penetration of banking services, poor credibility of financial entities due to some cases of mis-selling and frauds, low post-tax return on bank deposits, negative/low real interest rates are some of the issues that need to be addressed to redirect non-financial savings towards financial savings, it said.
Describing the launch of inflation indexed bonds as a positive step, the report said more such instruments are needed to encourage savings habit among the households.
The bonds were launched early this month to help retail investors hedge themselves against high inflation and also to wean away the public from investing in gold and other non- productive instruments.