India’s household financial savings rose to 5.1 per cent of gross national disposable income (GNDI) in 2023–24, up from a multi-year low the year before.
The Reserve Bank of India (RBI) released this data in its annual report for 2024–25. The rebound reflects a positive economic outlook and easing inflation.
The RBI expressed confidence that retail inflation would align with the 4 per cent target over the next 12 months.
The report said, “Benign inflation and moderate growth require a growth-supportive monetary policy, while staying alert to changing global conditions.”
Gross Savings Stable; Household Savings Rise
Gross domestic savings stayed at 30.3 per cent of GNDI in FY24. This stability was due to a decline in the government’s dissaving.
Household gross financial savings increased to 11.2 per cent, from 10.7 per cent in FY23. However, liabilities also rose, reaching 6.1 per cent of GNDI.
As a result, net household financial savings rose to 5.1 per cent, from 4.9 per cent in the previous year.
The report said the savings-investment gap narrowed in FY24. It attributed this to less drawdown by the government, weak investment from households and companies, and slower savings by financial firms.
Economists predict further gains in FY25.
Soumya Kanti Ghosh, group chief economic adviser at SBI, estimates net household financial savings could reach ₹22 trillion, or 6.5 per cent of GNDI.
That would mark a sharp improvement from the 5.1 per cent seen in FY24.
Growth Prospects Strong; Global Risks Remain
While the economy looks positive, the RBI warned of global economic risks. The 2025–26 outlook depends on US tariff policies and possible retaliatory moves.
The RBI said India is set to remain the fastest-growing major economy in 2025–26.
Growth will come from higher private consumption, strong bank and corporate balance sheets, easier financial conditions, and continued public investment.
The central bank projects 4 per cent inflation and 6.5 per cent GDP growth for 2025–26.
Since February, the monetary policy committee has cut the repo rate by 50 basis points. It adopted an accommodative stance in April, showing its support for growth.
But risks persist. The RBI highlighted threats to growth from trade protectionism, geopolitical tensions, and financial market volatility. These also pose upside risks to inflation.
However, the outlook for inflation remains hopeful.
The RBI said softer global commodity prices, stronger farm output, and high water reserves support the inflation target.
The RBI also expects a robust external sector. A strong services trade surplus and remittance flows should help keep the current account deficit within limits.
The government’s push to raise FDI limits in insurance to 100 per cent and the inclusion of Indian bonds in global indices should boost foreign investment.
India’s banks remain strong, said the report, but global risks require proactive risk control. It advised banks to manage interest rate risks in both trading and banking books, especially as net interest margins decline.
The report also flagged the NBFC sector’s dependence on banks for funds. It urged NBFCs to diversify funding sources.
A scale-based regulatory framework will improve governance and risk controls, it said.
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