Modi 3.0 Budget 2024: 48% Households Report Dip In Savings & Forced To Borrow For Basic Needs

The households reported that rising costs for basic expenses faced by a middle-class family, such as food, education, rent, transportation, and electricity, have been an issue.

According to a survey by the research firm Local Circles, the main worry is that many people are facing declining incomes and are forced to borrow money, use savings, or ancestral property or land in order to make ends meet.

Savings prior to FY 24–25

Nearly 48 per cent of households nationwide reported that they are increasingly dealing with a decline in earnings and savings prior to the Budget 2024–25.

The second wave of the COVID pandemic struck in 2020–21, the year that household savings reached a peak of Rs 23.29 lakh crore. After that, it started to decline. Then, in 2021–2022 and 2022–2023, it dropped to Rs 17.12 lakh crore and Rs 14.16 lakh crore, respectively.

Household savings rate

In the three years leading up to 2022–2023 (FY23), net household savings in India fell precipitously by Rs 9 lakh crore to Rs 14.16 lakh crore. According to the Ministry of Statistics and Programme Implementation's (MoSPI) National Account Statistics 2024 data, India's household savings rate decreased overall from 22.7 per cent of GDP in FY21 to 18.4 per cent in FY23.

According to the survey, while 48 per cent of respondents think their household earnings will decrease annually in FY 2024–25 compared to FY 2023–24, an equal number of respondents predict that their average household savings will decrease in FY 2024–25 compared to FY 2023–24.

15 per cent of households anticipate a decrease in savings of more than 25 per cent this year, while 7 per cent anticipate a decrease in household earnings of at least 25 per cent.

Growth of gross financial assets in decade

Over the past ten years, the average annual growth rate of gross financial assets has been 10.8 per cent, while the growth rate of financial liabilities has surpassed this average at 16.1 per cent. Notably, there was a notable decline in net financial assets in FY2022-23, resulting from a significant increase in financial liabilities that increased by 76 per cent year over year.

Survey participents

A noteworthy sample size of 21,000 respondents from 327 districts in India participated in the survey. Two categories of respondents were created, with 33 per cent of the respondents being female and 67 per cent of the respondents being male.

Furthermore, the sample of respondents to the survey was diverse, consisting of 44 per cent citizens from Tier 1 cities, 32 per cent from Tier 2 cities, and 24 per cent from Tier 3–4 cities and rural areas.