The Need for a Regulatory Sandbox

Prithu Sharma 27th March 2018

While India has had an average savings rate of more than 30 per cent during the eleventh and twelfth five-year plans, the overall savings rate is on the wane of late (see Figure 1). The trend of household savings is no different. Also, gross household financial savings as percentage of gross national disposable income (GNDI) has virtually stagnated as can be made out from Table 1. Even the jump in savings rate as a per cent of GNDI in 2016-17 was largely due to demonetisation.Additionally, this does not reflect any structural shift in the propensity of Indians to save via financial markets. This is clearly reflected in the fall of currency holdings and rise of deposits, respectively, for the year 2016-17.

Table 1

Year 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17*
Gross household financial saving (A) 10.4 10.5 10.4 10.1 10.9 11.8
Currency 1.2 1.1 0.9 1.1 1.4 -2.1
Deposits 6 6 5.8 5 4.8 7.3
Shares and debentures 0.2 0.2 0.2 0.2 0.3 1.2
Claims on government -0.2 -0.1 0.2 0 0.5 0.5
Insurance funds 2.2 1.8 1.8 2.4 1.9 2...

Note: Views expressed in this blog are those of the author.