Lok Sabha Question No. 1269 (UNSTARRED), answered on 2018-02-09
Subject: Domestic Savings
Ministry: FINANCE
Asked by: BHOLA SINGH

## Government of India Ministry of Finance Department of Economic Affairs

## LOK SABHA

## UNSTARRED QUESTION NO. 1269

TO BE ANSWERED ON FEBRUARY 9, 2018

## DOMESTIC SAVINGS

1269.  SHRI BHOLA SINGH:

Will the Minister of FINANCE be pleased to state:

- (a) whether  any  annual  target  has  been  set  with  regard  to  the  domestic  savings  by  the Government, if so, the details thereof;
- (b) the  proportion  of  growth  in  domestic  savings  in  comparison  to  Gross  Domestic  Product (GDP) during each of the last three years; and
- (c) the steps taken or being taken by the Government to encourage domestic savings and to promote the economy?

## ANSWER

MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PON. RADHAKRISHNAN)

- (a)  No specific annual targets for domestic savings are set by the Government.
- (b)  The growth in Gross Domestic Savings and Gross Domestic Product during the last three years is given in the table below:

| Table: Growth of Gross Domestic Saving and Gross Domestic Product (GDP) (per cent)   | Table: Growth of Gross Domestic Saving and Gross Domestic Product (GDP) (per cent)   | Table: Growth of Gross Domestic Saving and Gross Domestic Product (GDP) (per cent)   | Table: Growth of Gross Domestic Saving and Gross Domestic Product (GDP) (per cent)   |
|--------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------|
|                                                                                      | 2014-15                                                                              | 2015-16                                                                              | 2016-17                                                                              |
| Gross Domestic Savings at current prices                                             | 11.4                                                                                 | 7.0                                                                                  | 6.3                                                                                  |
| GDP at constant market prices                                                        | 7.4                                                                                  | 8.2                                                                                  | 7.1                                                                                  |

Source: Central Statistics Office

Note:  Growth  rates  are  based  on  first  revised  estimates  of  national  income,  consumption expenditure,  savings  and  capital  formation  for  2016-17  released  by  CSO  on  January  31, 2018.

- (c)    Savings  are  realized  from  three  broad  categories  of  savers,  viz.  households,  private corporate sector and public sector. Various measures have been taken by the Government to improve household financial savings, which ,  inter  alia ,  include: launch of Sukanya Samriddhi Yojana that can contribute significantly to the financial security to the girl child; and, Pradhan Mantri Jan-Dhan Yojana (PMJDY) which has been a landmark initiative of financial inclusion. Under PMJDY, about 31.01 crore bank accounts have been created -- of which about 59 per

cent  are  in  the  rural  areas  -  and  deposits  amounting  to  about  Rs.73,589  crore  have  been mobilized as on 24 th January 2018. The other initiatives like increase in the personal income tax exemption limit, increase in the limit of deduction under the Income Tax Act for contribution to specific pension funds and contribution by the employees to National Pension Scheme; and, increasing the access to formal financial system by utilizing the postal network; also have the potential  to  boost  household  savings.  Budget  2018-19  also  announced  certain  measures  to boost domestic savings in the economy which, among others, include, increase in exemption of interest income from Rs. 10,000 to Rs. 50,000 for the senior citizens on deposits with banks and  post  offices;  higher  limit  of  deduction  for  health  insurance  premium  for  senior  citizens. Greater public saving is sought to be achieved through efforts at fiscal consolidation, including rationalization  of  subsidies  and  promotion  of  direct  benefit  transfer.  The  initiative  to  reduce corporate tax in a phased manner and various initiatives to encourage industry and enterprise are expected to improve corporate saving.

The Government of India has taken various initiatives to boost  the  growth  of  the  economy which, inter-alia, include;  fillip  to  manufacturing,  measures  to  improve  the  ease  of  doing business, concrete measures for transport and power sectors as well as other urban and rural infrastructure,  comprehensive  reforms  in  the  foreign  direct  investment  policy  and  special package  for  textile  industry.  The  introduction  of  the  Goods  and  Services  Tax  (GST)  has provided a significant opportunity to improve growth momentum by reducing barriers to trade, business and related economic activities. The Insolvency and Bankruptcy Code was enacted to  achieve  insolvency  resolution  in  a  time  bound  manner. The  government has launched a phased program for bank recapitalization. This entails infusion of capital to the public sector banks, which is expected to encourage banks to enhance lending. For highways development the Bharatmala Pariyojana has been launched.

The  Budget  2018-19  also  included  various  measures  to  provide  impetus  to  the  economic growth which, among others, include major push to infrastructure via higher allocation to rail & road  sector,  expansion  of  airport  capacity,  reduced  corporate  tax  rate  of  25  per  cent  for companies with turnover up to Rs. 250 crore which is expected to help 99 per cent of Micro, Small  and  Medium  Enterprises  (MSMEs)  filing  their  returns,  etc.  The  Budget  particularly focused on strengthening agriculture and rural economy via emphasis on rural housing, rural infrastructure, keeping Minimum Support Prices (MSP) of unannounced kharif crops at least one and half times of their production cost; improving the quality of education; provision of good health care to economically less privileged and emphasis on job creation. Government had  also  announced  various  measures  in  the  Budget  2017-18  to  promote  growth  in  the economy  which,  among  others,  includes  push  to  infrastructure  development  by  giving infrastructure  status  to  affordable  housing,  higher  allocation  to  highway  construction,  and focus on coastal connectivity.

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