RBI Deputy Governor Highlights Role of Domestic Savings in India's Economic Growth
RBI Deputy Governor Michael Debabrata Patra emphasized that domestic savings have been crucial in financing India's economic investment needs. Speaking at the Financing 3.0 Summit, Patra noted a significant decline in household financial savings post-pandemic. He stressed the importance of rising household incomes in rebuilding financial assets and highlighted the role of the private corporate sector and public sector borrowing in shaping India's economic future.
- Country:
- India
Reserve Bank Deputy Governor Michael Debabrata Patra on Tuesday emphasized the critical role domestic savings play in financing India's economic investment needs. Speaking at the Financing 3.0 Summit organized by the Confederation of Indian Industries (CII), Patra pointed out that the net financial savings of households have nearly halved since 2020-21 due to a behavioral shift from financial to physical assets such as housing.
'Going forward, boosted by rising incomes, households will likely build back their financial assets,' Patra said. He noted that households' financial assets have increased from 10.6% of GDP during 2011-17 to 11.5% during 2017-23, excluding the pandemic year. Physical savings have also seen a rise.
Patra further highlighted the reduced net borrowing by the private corporate sector, attributing it to rising internal accruals and subdued capacity creation. Looking ahead, he predicted an increase in its net borrowing requirement driven by a revival in the capex cycle, which will largely be funded by households and external resources. Meanwhile, public sector net borrowing will persist given its critical role in fiscal policy.
(With inputs from agencies.)
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