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Gross domestic savings (% of GDP) in India According to a World Bank report published in 2012. Gross domestic savings are calculated as GDP less final consumption expenditure .
Gross domestic savings is derived as the difference between GDP and total consumption or gross national savings minus net factor income from abroad. For some countries, the concept of gross national savings is employed. Gross national savings (GNS) is computed as GNP minus total consumption, thus this value includes the net factor income from abroad. Most countries present GDS as a percentage of GDP except for the economies of Azerbaijan, Bangladesh, Kazakhstan, Nepal, Pakistan, Philippines, and Sri Lanka, which use GNS. We all know that GDP is the money value of all the final goods and services produced in the domestic territory of a country in a years time. So, Gross Domestic Product (GDP) measures the total output of goods and services for final use occurring within the domestic territory of a given country, regardless of the allocation to domestic and foreign claims. A part of this total monetary value i.e. GDP is consumed. What left after the consumption is "saving". So, Gross Domestic Saving is the Gross Domestic Product minus final consumption. The saved money is either kept with the public or is invested back. When the money is invested back, we come to the figures known as Capital Formation. The Ratio of saving and investments is very important for the economic health of the country. Gross Domestic Saving is different from the Gross National Savings, which is equal to gross domestic savings (gross domestic product minus final consumption) plus net income and net current transfers from abroad. The value for Gross domestic savings (current US$) in India was $544,488,000,000 as of 2010. Over the past 50 years, the value for this indicator has fluctuated between $544,488,000,000 in 2010 and $4,535,907,000 in 1960.
Graphical view :
steadily increased during this period. Since 2000-01 the household sector has shown a preference for savings in the form of physical assets, which could be attributed partly to the soft interest regime in recent years. Household savings is composed of both financial and physical savings. Increase in the rate of household savings in physical asset in recent years reflects booming construction activities mainly of housing and accelerated industrial activities requiring machinery and equipments.
Among the constituents of the private corporate sector, joint stock companies (financial and nonfinancial) accounted for more than 90 per cent of the private corporate sector saving in the current decade and their share reached about 95 per cent in the latter half of the decade. Correspondingly, share of the cooperative banks and societies including a few nonprofit corporate institutions steadily decreased from 7.8 per cent in 2004-05 to 6.3 per cent in 200607 and further to 5.0 per cent in 2009-10. Within joint stock companies, the share of nonfinancial companies remained at the level of 95 per cent while the financial companies, covering private banks and insurance companies, and non-banking financial companies accounted for the remaining 5 per cent.
ANALYSIS OF GDS
India continues to remain one of the high savings economies among the emerging market economies. Gross Domestic Savings (GDS) of the Indian economy constitutes savings of public, private corporate and household sectors. In the recent period, the high growth performance of the Indian economy is driven by rise in savings and investment. The buoyant trend in the gross domestic savings is powered by savings in household sector until recent past, more recently by the corporate sector and the public sector. It is significant to note that the increasing trend in gross domestic savings as a proportion of GDP since 2001-02 has continued with the savings rate rising sharply from 26.4 per cent in 2002-03 to 34.8 per cent in 2006-07 to 33.33 in 2012. . At a disaggregated level, it is the household sector, which occupies a position of dominance over the other institutional sectors like private corporate sector and the public sector in terms of generating savings .Savings by public sector and private corporate sector are improving in recent years. From 1999-2000 to 2002-03, the declining trend of the public sector savings (from 0.6 to -2.0 per cent) was a cause of concern. However, during the recent period it witnessed improvement. The rate of savings in private corporate sector increased from 4.4 per cent 2003-04 to 7.8 per cent in 2006-07. Analysis of household savings. As a percentage of GDP at current market prices, the rate of savings of the household sector increased from around 7.0 per cent in the 1950s to over 18.0 per cent in the 1990s. In 200607, it stood at 23.8 per cent. Within the household sector savings, the rate of savings held in financial assets steadily increased during this period. Since 2000-01 the household sector has shown a preference for savings in the form of physical assets, which could be attributed partly to the soft interest regime in recent years. As a percentage of GDP at current market prices, the rate of savings of the household sector increased from around 7.0 per cent in the 1950s to over 18.0 per cent in the 1990s. In 200607, it stood at 23.8 per cent. Within the household sector savings, the rate of savings held in financial assets steadily increased during this period. Since 2000-01 the household sector has shown a preference for savings in the form of physical assets, which could be attributed partly to the soft interest regime in recent years. As a percentage of GDP at current market prices, the rate of savings of the household sector increased from around 7.0 per cent in the 1950s to over 18.0 per cent in the 1990s. In 2006-07, it stood at 23.8 per cent. Within the household sector savings, the rate of savings held in financial assets steadily increased during this period. Since 2000-01 the household sector has shown a preference for savings in the form of physical assets, which could be attributed partly to the soft interest regime in recent
years. As a percentage of GDP at current market prices, the rate of savings of the household sector increased from around 7.0 per cent in the 1950s to over 18.0 per cent in the 1990s. In 2006-07, it stood at 23.8 per cent. Within the household sector savings, the rate of savings held in financial assets steadily increased during this period. Since 2000-01 the household sector has shown a preference for savings in the form of physical assets, which could be attributed partly to the soft interest regime in recent years. Analysis of private savings
The rate of savings of the private corporate sector witnessed a steady increase from 1.0 per cent of GDP in the 1950s to 1.7 per cent in the 1980s, to rise to 3.8 per cent in the 1990s and further to 7.8 per cent in 2006-07. In terms of composition, the share of the private corporate sector savings in the GDS also increased from 10.2 per cent in the 1950s to 16.3 per cent in the 1990s. By 2006-07, this increased further to 22.4 per cent. The rate of savings in private corporate sector since the last three years followed upward momentum, reflecting higher retained earnings resulting from higher profits. It may be mentioned that the savings rates of private corporate sector had been stagnant during the 1950s to 1990s. Analysis of Public Savings On account of sharp deterioration in the savings of the Government Administration, the rate of savings of the public sector, which witnessed an increasing trend till the 1970s, started declining thereafter, and turned negative since 1998-99. However, from 2003-04 onwards savings of public sector turned positive, reflecting mainly the outcome of the implementation of Fiscal Responsibility and Budget Management Act (FRBM Act), 2003. Public sector savings rate increased to 2.2 per cent in 2004-05 from 1.0 per cent in 2003-04, resulting from lower dis-savings by public authorities as well as improvement in non-departmental enterprises savings.
CONCLUSION
Net Saving Rate in india showed secular rise in the last three decades. Particularly notable was the dramatic rise during the latter half of the seventies. It rose more than three fold from an average of 6.5% in the first plan period (1951/52-1955/56) to about 22 % in 1976/771978/79. Nearly 1/3rd of the increase was in the last three years. The behaviour of domestic savings is heavily influenced by the household sector which contributed three-fourths to domestic savings. India's gross domestic savings rate has increased near-steadily over the Five-Year Plans and is among the highest in the world in the recent period. The recent savings rate of the country is comparable to Indonesia, Thailand and Korea but much lower than that of China, Malaysia and Singapore. Consumer states like the US and the UK had their savings rate as low as 11%
levels in 2009, while the rate is 17% for France and 21.4% for Germany. Among emerging economies, Brazil had a low savings rate at 16.5%. A high-powered working group led by Reserve Bank of India deputy governor Subir Gokarn has projected that country's savings rate may rise to around 38-39% of GDP by the end of 12th Five Year Plan if economic growth returns to 8% level.