Domestic savings in the country are reviving, registering the biggest drop since 2020-21 and they will be the top lenders to the economy in the next decade, RBI Deputy Governor Michael Debbrata Patra said. Every household in India generates more than its investment i.e. surplus savings which it lends to other sectors. Addressing a financing summit organized by the Confederation of Indian Industries, he said that financial savings among many households in the country had halved in the recent period from its 2020-21 level due to a change in people's attitudes. People were shifting their investment from financial assets to physical assets like housing, due to which household savings were also falling. In the next phase, households will start building their financial assets again due to the increase in people's income. This process has already begun as household financial assets have increased from 10.6% of GDP in 2011-17 to 11.5% in 2017-23 (excluding the year of Covid). Their domestic savings have also increased to 12% of GDP post-Covid years and may increase further in the coming years. It reached 16% of GDP during the year 2010-11. The corporate sector has reduced its lending to the economy which has also reflected its increase in income as well as the decline in capacity building. Patra emphasized that India will need to transform its institutional architecture to meet the credit requirement. The focus will be mainly on social and digital infrastructure, training people for skills, green energy, innovative manufacturing and lending to MSMEs. It is also imperative to have a strong corporate bond market with secondary market trading liquidity. Credit viewed as an enabler will play an increasingly dynamic role in driving investment and bringing in new technology, although capacity expansion in terms of external funding will also need to expand in order to enhance export potential and attract FDI. In India's quest for higher levels of growth, credit should be seen as an enabler rather than a hindrance. RBI's critical role in stable-sustainable credit CII Director Chandrajit Banerjee also praised the excellent performance of the country's external sector and emphasized the RBI's role in ensuring that its credit is stable, sustainable and aligned with the country's economic policy. He said more investment could be useful in building physical infrastructure, components for the digital economy and access to more credit in areas such as renewable energy, warehousing, semiconductor ecosystem and data centers.
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Surplus Savings: Growth in domestic savings of the country, remains as the economy's top lender: RBI
