Indians are borrowing more but saving less, reveals RBI data

News Network
September 26, 2023

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A dip in Indian households' net financial savings due to elevated debt threatens to choke major sources of funds for the government's capital investments, key for the nation to retain its mantle of the fastest-growing major economy, according to a report published by Bloomberg News. 

In its latest data, the Reserve Bank of India stated household financial assets, including bank deposits, cash, and equity investments, after deducting debt servicing and consumption, eased to 5.1% of gross domestic product in the fiscal year ended March from 7.2% in the previous year. 

This level is the lowest since the fiscal year ended March 2007 and will crimp resources for the rest of the economy, as per calculations done by IndusInd Bank Ltd.'s Chief Economist Gaurav Kapur. 

In absolute terms, net household financial savings added stood at ₹22.8 trillion in FY21 and it came down to ₹16.9 trillion in FY22 and to ₹13.75 trillion in FY23.

The report also stated that the Indian government depends on these savings to finance its capital investments in physical assets such as infrastructure, machinery, and equipment, Bloomberg reported. 

While savings increased for many households globally during the pandemic, most used up the resultant extra spending power as COVID-19 curbs ended.

Saugata Bhattacharya economist at Axis Bank Ltd said, "Household financial savings not keeping pace with growth is a matter of concern. Without adequate domestic savings, funding the needed investment will require large foreign capital, which is often volatile."

“The household sector is consuming by borrowing more. This happens when the income level stays stagnant but inflation creeps up. The recovery is not broad-based — while a section splurges on luxury goods, others are borrowing to stay afloat," said Rupa Rege Nitsure economist with L&T Finance Holdings Ltd. as quoted by Bloomberg. 

More than 300 million Indian households have seen debt levels increase following aggressive lending tactics by banks after the pandemic. The rise in financial liabilities with falling asset levels could be a sign of rising inequality. 

The finance ministry, meanwhile, sought to dispel worries expressed by economists about the declining trend of financial savings of households saying it signaled a shift in their investment preference for non-financial assets. 

Investments into financial instruments are often guided by factors like risk perception, financial literacy, and easy liquidity while purchases of physical assets like houses and gold are often based on the need for these assets, their potential for appreciation, and cultural factors.

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News Network
May 4,2024

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Mangaluru, May 4: A tragic incident unfurled last evening in Subrahmanya of Kadaba taluk in Dakshina Kananda, where a young gentleman, who had recently entered the bonds of matrimony a mere ten days hence, met his untimely demise due to a lightning strike.

As twilight descended, a tempestuous thunderstorm, accompanied by billowing rain clouds, cast its shadow over the locale.

Somasundar was diligently engaged in the task of piling up dried nuts in the yard to shield them from the impending deluge, when fate cruelly intervened, subjecting him to the fatal force of a lightning bolt.

Despite the expeditious efforts to convey him to Kadaba Community Hospital subsequent to his sudden indisposition, he tragically succumbed to his injuries. 

Somasundar, who operated a car washing enterprise in proximity to Subrahmanya, is mourned by his mother, sister, and wife.

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News Network
April 22,2024

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The BJP has opened its account in the ongoing Lok Sabha elections. The party's candidate from Gujarat's Surat constituency, Mukesh Dalal, has won the polls as all his opponents are now out of the fray.

BJP's Mukesh Dalal elected unopposed from the Surat Lok Sabha seat after all other candidates withdrew from the contest, the party's Gujarat unit chief CR Paatil said today. Today was the deadline for withdrawing nominations.

The nominations of the Congress party's Surat candidate and his substitute were rejected by the returning officer over alleged discrepancies in paperwork, a development that the Congress called an attempt at "match-fixing".

"Surat has presented the first lotus to Prime Minister Narendra Modi. I congratulate our candidate for Surat Lok Sabha seat Mukesh Dalal for getting elected unopposed," Mr Paatil posted on the microblogging website X, referring to the BJP's election symbol.

Eight candidates - seven of them independents - and Pyarelal Bharti of the Bahujan Samaj Party (BSP) withdrew their papers.

The nomination papers of the Congress's Surat candidate Nilesh Kumbhani was rejected on Sunday after the district returning officer Saurabh Parghi found discrepancies in the signatures of the proposers.

The nomination form of Suresh Padsala, the Congress's substitute candidate from Surat, was also found invalid.

The returning officer had said the four nomination forms submitted by the two Congress candidates did not appear genuine. The proposers, in their affidavits, had said they had not signed the forms themselves, the returning officer said in the order.

Congress lawyer Babu Mangukiya said the party will approach the high court and the Supreme Court for relief.

Congress leader Jairam Ramesh in a post on X said the Surat developments indicate "democracy is under threat". "Our elections, our democracy, Babasaheb Ambedkar's Constitution - all are under a generational threat. This is the most important election of our lifetime," Mr Ramesh said.

Mr Ramesh alleged the "distress" of micro, small and medium enterprise (MSME) owners and the business community in PM Modi's "Anyay Kaal" and their anger have "spooked the BJP so badly that they are attempting to match-fix the Surat Lok Sabha polls, which they have won consistently since the 1984 Lok Sabha elections."

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News Network
April 25,2024

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The Election Commission of India on Thursday announced that it had taken cognisance of violations to the Model Code of Conduct by both Prime Minister Narendra Modi and Congress leader Rahul Gandhi.

While Modi has indulged in a diatribe against Muslims, without naming them, using terms like 'infiltrators' and 'those with more children', Rahul has been accused of making a false claim about 'rise in poverty'.

Both the BJP and INC have raised allegations of causing hatred and divisions based on caste, religion, language, and community, ANI reported.

While the EC had initially refused to comment on Modi's speeches, sources had told PTI that the commission was 'looking into' the remarks made by the BJP leader.

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