Household savings moderated in Q3FY21, for the second consecutive quarter, driven by a significant weakening in the flow of finances, more than offseting the moderation in the flow of household financial liabilities.

       Preliminary estimates released by the Reserve Bank of India (RBI) showed that household savings came in at 8.2 per cent of gross domestic product (GDP) in the third quarter of 2020-21.

       The financial savings were recorded at 10.4 per cent in the second quarter, and stood at a healthy 21 per cent in the first quarter of 2020-21, which was the quarter before the Coronavirus (Covid-19) pandemic and lockdown started.

       The ratio of household (bank) deposits to GDP declined to 3 per cent in the third quarter from 7.7 per cent in the previous quarter.

       “Despite higher borrowings from banks and housing finance companies, the flow in household financial liabilities was marginally lower in the third quarter of 2020-21 following a marked decline in borrowings from non-banking financial companies,” the RBI said in a statement.

       Meanwhile, the household debt to GDP ratio has been increasing steadily since end-March 2019, the RBI observed. It rose sharply to 37.9 per cent at end-December 2020 from 37.1 per cent at end-September 2020.