NewKerala.com

Key Points

India's household savings have dipped to 18.1% of GDP in FY24, marking three consecutive years of decline. The report highlights a worrying trend of rising financial liabilities as credit dependence grows among households. Rural areas show resilience with wage growth outpacing inflation, while urban consumer sentiment remains pessimistic. Experts anticipate recovery with potential RBI rate cuts and easing inflation pressures in coming months.

Key Points: India Household Savings Drop to 18.1% GDP Amid Rising Credit Reliance

  • Household savings decline for 3rd straight year to 18.1% GDP
  • Rural wages grow 6.1% outpacing inflation
  • Financial liabilities double to 6.2% GDP
  • IT sector labor costs plunge from 26% to 4%
2 min read

Household savings in India drop to 18.1% of GDP in FY24: CareEdge Ratings

CareEdge report shows India's household savings fell to 18.1% GDP in FY24 while financial liabilities doubled, with rural wages offering hope.

"RBI policy rate cuts, lower tax burden and continued easing of price pressures remain key tailwinds - CareEdge Ratings"

New Delhi, June 15

India's household savings continued their downward trajectory for the third straight year, slipping to 18.1 per cent of GDP in financial year 2024 (FY24), as per CareEdge Ratings.

The report added that Gross domestic savings declined to 30.7 per cent of GDP in FY24 from 32.2 per cent in FY15.

On the other hand, household financial liabilities surged to 6.2 per cent of GDP, nearly doubling over the past decade, reflecting growing reliance on credit amid consumption needs, the report observed.

It highlights that despite the concerning savings trend, rural India offers a silver lining. Wage growth for rural male workers rose by 6.1 per cent year-on-year in February, outpacing rural inflation for the fourth consecutive month. This, along with easing food inflation and favourable agricultural prospects, is supporting rural demand recovery, the report added.

Rural consumer confidence, hovering around the neutral 100 mark, reflects a cautious optimism. In contrast, urban consumer confidence remains in pessimistic territory, though expectations for the year ahead remain upbeat across both segments, the report added.

In the broader economy, labour cost growth for major IT firms has slowed significantly from a peak of 26 per cent in Q3 FY23 to just 4 per cent in Q3 FY25, highlighting a broader trend of cost rationalisation in the corporate sector, as per the observations of the report.

On the inflation front, CPI eased to 3.2 per cent in April 2025, the lowest since August 2019. However, high prices of edible oils (17.4 per cent) and fruits (13.8 per cent) continue to keep overall food inflation in check. The upcoming Rabi harvest, healthy reservoir levels, and forecast of above-normal monsoon rains are expected to further support food price stability, the report added.

"Going ahead, RBI policy rate cuts, lower tax burden and continued easing of price pressures remain key tailwinds for the broad-based demand recovery," the report said

As per the government data, the Indian economy grew by 6.5 per cent in real terms in the recently concluded financial year 2024-25.

- ANI

Share this article:

Reader Comments

R
Rajesh K.
This is worrying but not surprising. With rising EMIs, education costs and medical expenses, how can middle class families save? Government should give more tax benefits for savings schemes. At least rural India is showing some positive signs.
P
Priya M.
The credit card culture is destroying our savings habits. Everyone wants instant gratification these days. My parents used to save 30% of income, now we struggle to save 10%! 😔 Need financial literacy campaigns in schools.
A
Amit S.
Good to see rural recovery but urban middle class is suffering. Job market is tough, salaries stagnant but costs keep rising. Hope the predicted monsoon brings relief to food prices. Government should focus on creating more high-paying jobs.
S
Sunita R.
As a small business owner, I see both sides. People are spending more but mostly on essentials. The 6.5% GDP growth is good but doesn't reflect ground reality for common people. More focus needed on affordable healthcare and education.
V
Vikram J.
The IT sector slowdown is concerning - it affects so many related industries. But positive signs with inflation coming down. Maybe RBI can cut rates now to boost investment. Overall, need better balance between consumption and savings.
N
Neha T.
Interesting how rural India is recovering faster than urban areas. Maybe city folks need to learn some frugal habits from our villages! Jokes aside, this shows agriculture reforms are working. Hope the good monsoon prediction comes true 🤞

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

Leave a Comment

Minimum 50 characters 0/50