The Finance Ministry today decline the reports of any distress regarding household savings and its overall effect on economy. They stated that changing consumer preferences for various financial products are the primary reasons behind these trends.
In a social media post, the Ministry said that between June 2020 and March this year, the Stock of Household Gross Financial Assets went up by 37.6 per cent, and the Stock of Household Gross Financial Liabilities went up by 42.6 per cent with no big difference between the two.
The Ministry noted that the Households added net financial assets by a lesser magnitude in Financial Year (FY) 23 than in the previous years because they have now started taking loans to buy real assets including homes. It further highlighted that the Reserve Bank of India data shows a steady double-digit growth in loans for housing since May 2021 and Vehicle loans have been growing at double digits since April last year and more than 20 per cent since September last year. It said, these data suggest a growing trend of financing the purchase of vehicles and homes through mortgages.
Underlining growth of the sector, it said overall household savings has grown at a Compound Annual Growth Rate of 9.2 per cent between 2013-14 and 2021-22. Household Savings has also remained constant from around 20.3 per cent to 19.7 per cent as of FY22.
The Ministry also pointed out that in FY23, the Non-Banking Financial Corporations (NBFC) has lent nearly two lakh 40 thousand crore rupees to the household sector which is 11.2 times higher than the previous year. The Ministry added, 36 per cent of NBFC’s Outstanding Retail Loans are for the purchase of vehicles which is a sign of confidence in their future employment and income prospects.