2. In recent years, savings rate in the Indian economy has witnessed a consistent decline. What are the factors responsible for this trend? How has the composition of savings changed in the last few years? Suggest measures to improve and better channelize household savings.

Approach:

Gross Domestic Savings, investment, Gross Capital formation are invariably linked with growth. Answer should be structured as follows:

♤ Introduce by mentioning the peak in savings in 2008 followed by a down turn.

♤ Enumerate the causes attributed for the declining trend in savings.

♤ Composition of Savings in terms of the share of Household saving, Public or government savings and Corporate savings should be highlighted

♤ Measures to better channelize household savings should be in the context of decline in financial savings and a rise in physical savings such as land and gold in recent years.