MUMBAI: Household sector financial savings – the largest source of funds – jumped 3.6 percentage points to 11.5% of gross national disposable income (GDNI) in FY21, the highest in more than two decades, according to the RBI annual report.
The reduction in discretionary spending amid the pandemic and associated issues has forced saving, along with an increase in precautionary saving, due to concerns over short-term income flows, has boosted saving Household.
Savings in the form of deposits grew the most, increasing to 6.3% of GNDI in FY21 from 4.2% the previous year. Investments in insurance funds also contributed to the jump, increasing to 2.6% against 1.8% of the GNDI. Next come cash savings (1.9% of GNDI against 1.4%) and investments in provident and retirement funds.
“With investment opportunities largely closed during the lockdown, money was bound to flow into bank deposits and stock markets via insurance and pension funds,” said Madan Sabnavis, chief economist at the Bank of Baroda.
Savings in physical assets like real estate and land saw a sharp decline to 10.2% of GNDI from 11.1%, while saving in valuables like gold and silver ornaments remained stable at 0.2% RNBD. The gross domestic savings rate fell to 27.8% of gross national disposable income (GNDI) in FY21, from 29.4% a year ago, due to government sector dissaving government and a decline in the savings of non-financial corporations.
Savings in the form of deposits sees the highest growth
Savings in the form of deposits grew the most, increasing to 6.3% of GNDI in FY21 from 4.2% the previous year. Investments in insurance funds also contributed to the jump
Currency circulation up 9% in FY22
New Delhi: The value of banknotes in circulation increased by 9.9% in FY22 from 16.8% in FY21, the RBI said in its annual report on Friday. At `31.05 lakh crore, the value of the currency is 13% of India’s GDP. During demonetization in November 2016, the money in circulation was 17.74 lakh crore, so there has been a 75% increase since then. In terms of volume, banknotes in circulation increased by 5% in FY22 compared to 7.2% the previous year. This is the fourth year in a row that RBI has not printed a single `2000 note. “In terms of value, the share of the `500 and `2000 currencies accounted for 87.1% of the total value of banknotes as of March 31, 2022. ENS