A note submitted to a parliamentary panel said gross financial savings in terms of deposits, share, debentures, insurance funds and pension funds increased by 48% in 2016-17, while assets parked in mutual funds grew by 45% between July 2016 and July 2017.
INDIA Updated: Nov 10, 2017 09:56 IST
Hindustan Times, New Delhi
Demonetisation has brought about a significant shift in saving habits among Indians, with many parking a higher share of their disposable income in bank deposits and market instruments, the government has said.
A finance ministry note submitted to a parliamentary panel said gross financial savings in terms of deposits, shares, debentures, insurance funds and pension funds increased by 48% in 2016-17, while assets parked in mutual funds grew by 45% between July 2016 and July 2017.
“The demonetisation drive led to a significant change in saving habits and formalisation of the assets market. More funds came into the organised financial markets, whereas households would earlier park much of their savings in unproductive physical assets,” the note stated.
This shift in savings pattern is significant because India has always fluctuated between high and low domestic savings. The country had already seen its share of equities and mutual funds double from 5.29% to 11.04% in fiscal year 2016 — indicating more consistency in monetary deposits as far as productive financial assets were concerned.
“The gross financial saving in term of deposits, shares and debentures, insurance funds, and provident and pension funds increased from 9% to 13.3% of the GNDI (Gross National Disposable Income) in 2016-17 — a hike of about 48%. The assets under management by mutual funds were Rs 13.8 lakh crore at the end of July 2017, which is a substantial increase of 45%,” the note said.
The high collection of insurance premium also indicates that people rushed to pay them with old currency notes after Prime Minister Narendra Modi’s announcement. “The cumulative collections from November 2016 to January 2017 increased by 46% over the same period of the previous year. It stabilised at 18% from November 2016 to June 2017,” the note said.