India is witnessing a notable shift in its economic landscape as the financial habits of households are taking a new path. According to the survey on the dramatic fall in Indian families’ savings on Real Research, an online survey app, there is an evident decline in India’s household savings rate, which dropped from 7.3% in 2022 to 5.3% in 2023.

50.40% of respondents expressed ‘extreme’ concern about this sharp decline in savings rates among Indian families. 

Highlight:

  • 71.70% see increased borrowing, higher debt repayments, and reduced savings.
  • 60.92% note that India’s housing debt primarily consists of non-mortgage loans.
  • 61.34% observe a spike in credit card debt and medical expenses.

Factors at Play

Several factors could be driving the fall in Indian families’ savings, as household savings in India hit a 47-year low.

Rising economic instability, inflation, living costs, and lifestyle changes are among the key influences behind the fall in Indian families’ savings. As per the survey, 71.70% of the respondents agree that increased borrowing leads to more debt repayments and less savings. However, 60.92% of respondents also know that India’s housing debt largely consists of non-mortgage loans.

increased-debt-repayments
Figure 1: Respondents are aware of increased debt repayments.

The fall in Indian families’ savings can leave households vulnerable to unexpected expenses, emergencies, or economic downturns.

Read Also: How Much Do You Save from Your Salary?

61.34% of the respondents agree that there is a sudden surge in credit card debt and emergency medical expenses, although they make up less than 20% of total household debt. Therefore, it puts a hold on our long-term financial goals, such as children’s education, home ownership, or retirement.

increasing-consumer-borrowings
Figure 2: Respondents are aware of increasing consumer borrowings.

Addressing the Challenge

62.40% of the respondents still believe that the current borrowing level in a year will not affect India’s macroeconomic stability. However, more efforts are needed to promote a savings culture, enhance financial literacy, and provide savings incentives.

savings-decline-should-be-a-lesson
Figure 3: Respondents agree that this savings decline should be a lesson.

But 70.32% agree that the dramatic fall in Indian families’ savings should be a lesson, as this could pose a challenge to India’s economic development in the coming years.

Methodology

Survey TitleSurvey on the Dramatic Fall in Indian Families’ Savings
DurationMay 2, 2024 – May 10, 2024
Number of Participants5,000
DemographicsMales and females, aged 21 to 99
Participating Countries Afghanistan, Algeria, Angola, Argentina, Armenia, Australia, Azerbaijan, Bahrain, Bangladesh, Belarus, Benin, Bolivia,… Brazil, Brunei, Bulgaria, Burkina Faso, Cambodia, Cameroon, Canada, Chile, China, China (Hong Kong) China (Macao), China (Taiwan), Colombia, Costa Rica, Croatia, Czech Republic, Ecuador, Egypt, El Salvador, Ethiopia, Finland, France, Gambia, Georgia, Germany, Ghana, Greece, Greanada, Guatemala, Honduras, Hungary, India, Indonesia, Iraq, Ireland, Israel, Italy, Ivory Coast, Japan, Jordan, Kenya, Kuwait, Kyrgyzstan, Latvia, Lebanon, Libya, Lithuania, Malaysia, Maldives, Maluritania, Mexico, Moldova, Mongolia, Morocco, Mozambique, Myanmar [Burma], Namibia, Nepal, Nicaragua, Nigeria, Oman, Pakistan, Palestine, Panama, Peru, Philippines, Poland, Portugal, Qatar, Romania, Russia, Saudi Arabia, Serbia, Sierra Leone, Singapore, Slovakia, South Africa, South Korea, Spain, Sri Lanka, Tanzania, Thailand, Togo, Tunisia, Turkey, Turkmenistan, Uganda, Ukraine, United Arab Emirates, United Kingdom, United States, Uruguay, Uzbekistan, Venezuela, Vietnam, Yemen, Zimbabwe.