Indian household savings fell for the second straight quarter, accompanied by an increase in debt. The household saving rate fell from 10.4% in the previous quarter to 8.2% of GDP in the three months to December 2020, according to preliminary estimates released by the Reserve Bank. However, household savings skyrocketed in April-June 2020 due to precautionary inventories. The moderation was due to a marked weakening of the financial wealth of households. The share of household bank deposits in GDP fell to 3% in the third quarter of fiscal year 21 from 7.7% in the previous three months.
“Despite higher lending from banks and home finance companies, the flow of household financial debt was marginally lower in the third quarter of FY21 after a sharp decline in lending from non-banking financial firms,” the RBI said.
Household debt The ratio of household debt to GDP, based on selected financial instruments, has risen continuously since the end of March 2019.
Household liabilities of commercial banks rose to 27% of GDP in the third quarter of FY21, compared with 26.3% in the previous three months.
The share of household debt in GDP based on selected financial instruments has risen steadily since the end of March 2019 and rose sharply from 37.1% at the end of September 2020 to 37.9% at the end of December 2020.