Household savings in India hit a five-year low, while liabilities reached a five-year high, according to data from the Finance Ministry.
The Finance Ministry's latest data for FY24 reveals a concerning trend of declining household savings as a proportion of GDP, marking the third consecutive year of decline. Household savings, as a percentage of gross domestic product (GDP), dipped to a five-year low at the end of the fiscal year 2023-24, falling to 18.1% of GDP.
In contrast, household financial liabilities surged to a five-year high, reaching 6.2% of GDP. This increase reflects a growing reliance on credit for consumption needs, nearly doubling over the past decade.
Total bank credit has improved steadily, rising from ₹103.7 lakh crore in 2019-20 to ₹159.01 lakh crore in 2023-24. However, Indian banks are facing challenges with a decline in CASA (Current Account Savings Account) ratios among top lenders, which impacts their net interest margins. Banks are increasingly relying on costlier funding sources, and some are reducing savings account interest rates.
The net financial saving of the household sector improved marginally to 5.1% of gross national disposable income (GNDI) in FY24 from 4.9% a year earlier. In absolute terms, household savings increased from Rs. 38.5 lakh crore in 2019-20 to Rs. 54.6 lakh crore in 2023-24.
Despite the increase in absolute savings, the ratio to GDP has declined, indicating that savings growth has not kept pace with GDP growth. Rural wage growth and agricultural prospects offer some support to demand, but overall urban consumer confidence is subdued.
The report, presented by Minister of State in the Finance Ministry, Pankaj Chaudhary, also highlighted that gross domestic savings as a percentage of GDP has remained broadly stable at around 30%, indicating continued domestic resource mobilisation to support investment needs.
A SBI report suggests that the net financial saving of the household sector is the most important source of funds for the two deficit sectors, namely, the general government sector and the nonfinancial corporations. Based on current trends, it is estimated that the net financial savings may reach Rs 22 lakh crore (or 6.5% of GNDI) in FY25.
It's important to note that financial savings (or net financial savings) is the difference between financial assets and liabilities. Financial assets include bank deposits, investments in financial institutions, life insurance, provident fund, equity, mutual funds, and small savings schemes. Financial liabilities include loans from banks and non-banking financial companies.
The data presented was based on National Accounts Statistics prepared by Statistics and Programme Implementation Ministry (MoSPI). The report was published on August 5, 2025.
[1] Source: Finance Ministry's data for FY24 [2] Source: SBI Report [3] Source: National Accounts Statistics prepared by Statistics and Programme Implementation Ministry (MoSPI) [4] Source: Various bank reports and RBI data
- The Finance Ministry's report reveals a concerning trend of declining household savings as a proportion of GDP, marking the third consecutive year of decline, which is a key component of personal-finance management.
- Despite the increase in absolute savings, the ratio to GDP has declined, indicating that savings growth has not kept pace with GDP growth, a worrying sign for the economy's investment prospects.
- The Ministry of State in the Finance Ministry reports that the net financial saving of the household sector is the most important source of funds for the two deficit sectors, namely, the general government sector and the nonfinancial corporations.
- It's important to maintain a balance between investments and financial liabilities, as financial savings, being the difference between financial assets and liabilities, play a crucial role in the overall health of banking and markets.
- The SBI report estimates that the net financial savings may reach Rs 22 lakh crore (or 6.5% of Gross National Disposable Income) in FY25, revealing a significant shift in the dynamics of household personal-finance and the economy.
- The latest opinion from the markets suggests that the surging household financial liabilities, reflecting a growing reliance on credit for consumption needs, could impact future economic growth and stability.
