Households set to rebuild financial assets as income rises, says Patra

With rising incomes, households are expected to gradually rebuild their financial assets, reminiscent of the 15 per cent of gross domestic product (GDP) observed from the early 2000s until the global financial crisis, said Michael Debabrata Patra, deputy governor of the Reserve Bank of India, on Tuesday.

- ANJALI KUMARI

He added that households are likely to remain the primary net lenders to the economy in the coming decades.

In India, the household sector typically generates surplus savings relative to its investments, lending the excess to other sectors. Patra noted that the rebuilding process has already begun, with household financial assets increasing from 10.6 per cent of GDP during 2011-17 to 11.5 per cent during 2017-23, excluding the pandemic year.

Concurrently, household physical savings have also risen after the pandemic, exceeding 12 per cent of GDP, and are likely to increase further, potentially approaching the 16 per cent of GDP seen in 2010-11.