EUR 125.00 For Business Accounts Only

MOSL: ECOSCOPE: Household financial savings up marginally in 4QFY21

ECOSCOPE: Household financial savings up marginally in 4QFY21

 

• To improve our understanding of Indian households’ financial position, we have started estimating and publishing quarterly data on household (HH) savings. Household savings in India have two components: net financial savings (NFS) and physical savings. The latter is almost double the former and two-thirds of total HH savings. While the RBI produces quarterly data on HH NFS, this is done with a lag of 5–6 months. Replicating the RBI’s methodology, we produce our own quarterly estimates of HH NFS with a 3–4 months’ lag. Our calculations suggest HH NFS stood at 8.7% of GDP in 4QFY21, only marginally higher than 8.5% of GDP in 3QFY21. This implies HH NFS surged to 11.6% of GDP in FY21 from 8% of GDP in FY20.
• Using monthly data on stamp and registration charges (S&RCs) collected by the state governments, we have also prepared quarterly estimates of HH physical savings. Notwithstanding COVID-19, S&RCs surged in 2HFY21, to the extent that they came in just 2% YoY lower in FY21 (vis-à-vis 36% YoY decline in 1HFY21). This implies HH physical savings increased sharply in 4QFY21, driving total household savings higher.
• Accordingly, as per our estimates, HH (gross) savings in India increased to 24% of GDP in 4QFY21 from 21-22% of GDP in the previous two quarters and the peak of 28% of GDP in 1QFY21. In other words, HH savings rose to 23.3% of GDP in FY21 from 19.3% of GDP in FY20.