Indian household savings fell in the quarter ended September as the nation eased Covid-19 restrictions, increasing discretionary spending.
Household financial savings rate dropped to 10.4% of the GDP in the second quarter of FY21 from 21% in the preceding three months, according to preliminary estimates published in the Reserve Bank of India’s monthly bulletin.
Still, that’s higher than 9.8% recorded a year earlier. This reversion is mainly driven by an increase in household borrowings from banks and non-bank financial companies, accompanied by a moderation in household financial assets in the form of mutual funds and currency, the central bank said. With the gradual unlocking of the economy, households switched from an “essentials only” spending pattern to discretionary spending, resulting in the reversal of household financial savings from the peak it attained in the first quarter.