About 48% Indians Suspect Reduction In Household Earnings, Savings In FY25

Days before the union budget,, 48 per cent of Indians believe their annual household earnings and average household savings will reduce in fiscal 2024-25 in comparison to the fiscal year 2023-24, according to a survey report by LocalCircles.

At least 15 per cent of households are projecting an over 25 per cent dip in savings this year while 7 per cent of them are projecting a 25per cent or higher drop in household earnings. This is largely because of the higher cost of living and other expenses, as per the survey. The LocalCircles survey received over 21,000 responses from household consumers located in 327 districts of India. 

The report added that many are hoping for some budget relief, be it a moderation in income tax rates, expansion of zero tax slab, or increase of deduction limits under 80C. 

Many have been talking about the rising costs related to food, school education, rent, transportation, cost of electricity, etc., the basic expenses incurred by a middle-class family. Even the recent CPI data of June month indicate food inflation of more than 8 per cent. The big concern is a declining earnings scenario for many is growing joblessness both in organised and unorganised sectors. As the unemployment rate in India rose to 8.1 per cent in April 2024 from 7.4 per cent in March 2024, according to the Centre for Monitoring Indian Economy (CMIE's) data.

Notably, net household savings saw a decline of sharp Rs 9 trillion to Rs 14.16 trillion in the three years to 2022- 23 (FY23). Overall, India’s household savings rate has fallen from 22.7 per cent of GDP in FY21 to 18.4 per cent in FY23, revealed the national account statistics 2024 data released by the Ministry of Statistics and Programme Implementation (MoSPI). Household savings touched a peak of Rs 23.29 lakh crore in 2020-21, following that it has been on the decline. 

Apart from this, domestic savings are also seeing a diversion from traditional banking deposits to new financial practices. Households are increasingly choosing capital markets over traditional banks, said RBI Governor Shaktikant Das while speaking at an industry event.