Thrift & financial savings – key for resilience

Metro India News | Hyderabad 

Money pots still exist. They are not just nostalgic. Kids still decorate and place money pots in religious celebrations such as in Ganesh Chavithi, Eid-al-Fitr, Christmas etc. These small savings nurture habits in their minds and serve as a safety net in their lives and for the economy as well.

31st October is World Thrift Day although India observes it on 30th October. Theme of year 2026 for World Thrift Day is ‘AI advises that Human decides’. Besides calling for more savings for better future, the theme kindles many nostalgies and also connects current financial and & economic aspects.

In India, saving is part of culture and family tradition but the volume has been fluctuating. After declining for few years, India’s Gross Domestic Savings (GDS) as a percentage of its Gross Domestic Product (GDP) has increased from 30.7% in 2022-23 to 34.9% in 2024-25.

Unlike in developed countries where corporate savings contribute major portion to the GDS and to GDP, in India, household savings are the highest. Currently, the contribution of household sector is 62% of GDS and 21.3% of GDP, both have also increased inline with the increase in GDS and can be seen in the trend presented below:

However, while on one side the household savings are increasing, on the other side the increase is not from surplus generated after meeting required living standards or by having a quality life. These savings are made despondently and out of concerns to face inflation, healthcare needs, and other family requirements. Contrary to general view that many things are subsidized in India by Government, public sector support is higher in developed economies. For instance, unemployment benefits, subsidized healthcare, support during catastrophes, etc are higher in developed economies.

One of the key requirements for higher economic activity is availability of capital. If more capital is available, the cost moderates. More savings are key for capital formation. To see happy savings in the place of helpless savings, there should be positive returns, strong capital pooling framework, zero banking system leakages, and minimal bad debts.  Simultaneously, improvised platforms backed by government should be created to provide more options and flexibility to the savers. Thrift for financial savings provide higher resilience not only to the savers, but also to the economy.

Dr. Kishore Nuthalapati is an Economist and is serving as the CFO of BEKEM Infra Projects Pvt Ltd, Hyderabad.