Date:02/10/2007 URL: http://www.thehindubusinessline.com/2007/10/02/stories/2007100251040600.htm

Back Indians spend faster than they save

Our Bureau

Mumbai, Oct. 1 Although Indian households are saving more, their spending has increased at a faster pace. According to the Handbook of Statistics on Indian Economy 2006-07, released by the Reserve Bank of India, household savings increased by 27.47 per cent and borrowings by 54.88 per cent.

In 2006-07, households savings or assets were at Rs 7,58,750 core (Rs 5,95,235 crore). As against this, borrowings or liabilities were at 2,81,093 crore (Rs 1,81,482 crore).

The high interest rates offered by commercial banks last year made bank deposits an attractive investment option for households. Bank deposits have increased to Rs 4,22,039 crore from Rs 2,74,693 crore, a rise of 53.64 per cent. The equity market also was a highly preferred mode, as the investment in shares and debentures increased by 62.32 per cent to Rs 48,228 crore (Rs 29,712 crore).

The non-bank deposits have, however, fallen to Rs 881 crore (Rs 6,130 crore), a fall of 85.63 per cent. The investment in life insurance also saw a rise of 36.34 per cent to Rs 1,13,900 crore (Rs 83,540 crore).

On the liabilities side, bank advances went up to Rs 2,72,136 crore (Rs 1,75,010 crore), up 55.49 per cent, which indicates that households are availing more loans.