Lok Sabha Question No. 3238 (UNSTARRED), answered on 2016-08-05
Subject: Poor Saving Habit
Ministry: FINANCE
Asked by: GOPALAKRISHNAN CHINNARAJ

- (a) whether as per the recent study, 47 per cent of working people in India have not started saving for their future or have stopped or faced difficulties while saving and if so, the details thereof;
- (b) whether the Government has analysed the reasons for such a low saving habit and if so, the details thereof; and
- (c) whether the Government has any proposal to improve and encourage serving people to save more for their future and if so, the details thereof?

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI ARJUN RAM MEGHWAL)

- (a) A survey by HSBC (Hong Kong and Shanghai Banking Corporation Limited) named 'Generations and Journeys' observed that 'a large number (47 per cent) of working age people in India have either not started saving for their retirement or have stopped or faced difficulties while saving for their future.' The report also observed that 21 per cent of the working age population surveyed have not even started saving for retirement.
- (b)  Household  saving  has  two  components-financial  saving  and  physical  saving.  Household  financial  savings consists  of  their  savings  in  terms  of  financial  assets  like  bank  deposits,  shares  and  debentures,  etc.  Household physical saving consists of household construction, their possession of machinery and equipment and valuables, etc. It is not clear from the published report of the HSBC Survey whether it refers only to the financial savings of the Indian labour force. The data from the National Accounts reveal that in 2014-15, Indian households saved about 19.1 per cent of the of the Gross domestic product, of which their physical savings consisted of 11.4 percentage points  and  financial  savings  consisted  of  7.7  percentage  points,  indicating  that  Indian  households  save  more  in physical form than in financial assets. The Survey conducted by the National Sample Survey Office during JanuaryDecember 2013 on Household Assets and Liabilities revealed that about 82.2 per cent of the rural households and 81.1 per cent of the urban households reported possession of bullion and ornaments. The strong bullion preference of  Indian  households,  along  with  the  generally  high  inflation  and  inadequate  access  to  banking  and  financial channels  that  prevailed  during  the  last  decade,  to  a  great  extent,  explained  the  saving  behavior  of  Indian households.
- (c) Keeping in view the need to improve financial inclusion and the channels for financial savings, various measures have  been  taken  by  the  Government.  Under  the  landmark  initiative  of  the  Government  for  financial  inclusionPradhan Mantri Jan-Dhan Yojana (PMJDY) - about 22.65 crore of bank accounts have been created till 27 th July 2016 with a balance of over Rs.40750 crore in these accounts. The initiatives like the re-launch of the certificate savings scheme called Kisan Vikas Patra; Sukanya Samriddhi Yojana to contribute to the financial security to the girl  child;  and measures taken to rein in inflation;  can also add to the financial savings of households. The other initiatives like: increase in the limit of deduction under the Income Tax Act for health insurance premium, 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. Availability of more financial and banking channels is likely to encourage people to save more in financial assets. Government's initiatives like Make-in-India, Skill India, Start-up India, Stand-up India and other measures to boost productive activities and employment are also likely to improve the savings of Indian labour force.

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