Indians are borrowing more but saving less, reveals RBI data

News Network
September 26, 2023

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A dip in Indian households' net financial savings due to elevated debt threatens to choke major sources of funds for the government's capital investments, key for the nation to retain its mantle of the fastest-growing major economy, according to a report published by Bloomberg News. 

In its latest data, the Reserve Bank of India stated household financial assets, including bank deposits, cash, and equity investments, after deducting debt servicing and consumption, eased to 5.1% of gross domestic product in the fiscal year ended March from 7.2% in the previous year. 

This level is the lowest since the fiscal year ended March 2007 and will crimp resources for the rest of the economy, as per calculations done by IndusInd Bank Ltd.'s Chief Economist Gaurav Kapur. 

In absolute terms, net household financial savings added stood at ₹22.8 trillion in FY21 and it came down to ₹16.9 trillion in FY22 and to ₹13.75 trillion in FY23.

The report also stated that the Indian government depends on these savings to finance its capital investments in physical assets such as infrastructure, machinery, and equipment, Bloomberg reported. 

While savings increased for many households globally during the pandemic, most used up the resultant extra spending power as COVID-19 curbs ended.

Saugata Bhattacharya economist at Axis Bank Ltd said, "Household financial savings not keeping pace with growth is a matter of concern. Without adequate domestic savings, funding the needed investment will require large foreign capital, which is often volatile."

“The household sector is consuming by borrowing more. This happens when the income level stays stagnant but inflation creeps up. The recovery is not broad-based — while a section splurges on luxury goods, others are borrowing to stay afloat," said Rupa Rege Nitsure economist with L&T Finance Holdings Ltd. as quoted by Bloomberg. 

More than 300 million Indian households have seen debt levels increase following aggressive lending tactics by banks after the pandemic. The rise in financial liabilities with falling asset levels could be a sign of rising inequality. 

The finance ministry, meanwhile, sought to dispel worries expressed by economists about the declining trend of financial savings of households saying it signaled a shift in their investment preference for non-financial assets. 

Investments into financial instruments are often guided by factors like risk perception, financial literacy, and easy liquidity while purchases of physical assets like houses and gold are often based on the need for these assets, their potential for appreciation, and cultural factors.

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News Network
November 14,2024

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Bengaluru: The Prime Minister Narendra Modi led union government has requested the Karnataka High Court to direct the Mandya district administration and the state government to clear a madrasa operating within the premises of the historic Jama Masjid in Srirangapatna.

The Waqf Board, opposing this move, has claimed the mosque as its property and defended the right to conduct madrasa activities there.

The matter was brought before a division bench headed by Chief Justice N V Anjaria following a public interest litigation filed by a person named Abhishek Gowda from Kabbalu village in Kanakapura taluk. The petition alleged “unauthorised madrasa activities” within the mosque.

Representing the Central government, Additional Solicitor General of India for High Court of Karnataka, K Arvind Kamath argued that the Jama Masjid was designated as a protected monument in 1951, yet unauthorised madrasa operations continue there.

He noted that concerns over potential law and order issues have so far prevented any intervention. Kamath urged the court to direct the Mandya district administration to take action and vacate the madrasa from the mosque.

In defence, lawyers for the state government and the Waqf Board contested this request, stating that the Waqf Board had been recognised as the owner of the property since 1963 and, thus, conducting madrasa activities there is lawful.

After hearing both sides, the bench adjourned the case for further arguments, scheduling the next hearing for November 20.

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News Network
November 14,2024

Bengaluru: Karnataka Deputy Chief Minister D K Shivakumar on Thursday backed Chief Minister Siddaramaiah over his claim that the BJP had offered Rs 50 crore each to 50 Congress MLAs in an attempt to "topple" the state government.

Addressing reporters here, Shivakumar, also the Congress state president, said, “The BJP indeed lured 50 Congress MLAs with Rs 50 crore each.”

He defended Siddaramaiah’s statement and said the Congress MLAs were briefed about the BJP’s alleged 'Operation Lotus', a term used to describe the BJP's attempts to destabilise ruling governments through horse-trading.

“Some of our MLAs informed the Chief Minister about this matter, and he, in turn, shared it with the media,” Shivakumar said.

At an event in Mysuru, Siddaramaiah reiterated the claim that "none of the Congress MLAs had accepted the offer".

He also accused the BJP of filing false cases against him in a bid to "remove him and overthrow his government".

The BJP has yet to respond to the allegations.

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News Network
November 18,2024

Advisors to US President-elect Donald Trump have instructed his allies and associates to refrain from using the inflammatory language they previously employed when discussing issues related to migrants and the deportation of asylum seekers, in a bid to avoid “looking like Nazis.”

US media reports said that Trump’s associates had been asked to stop using the word “camps” to describe potential facilities that would be used to accommodate migrants rounded up in deportation operations across the country.

The reports said the US president-elect’s allies had been ordered to stave off such charged terms as they would bring to mind “Nazis,” and be used against Trump.

“I have received some guidance to avoid terms, like ‘camps,’ that can be twisted and used against the president, yes,” one Trump ally told American monthly magazine Rolling Stone.

“Apparently, some people think it makes us look like Nazis.”

The presidential advisers also cautioned surrogates and allies to keep racist terms, which have dogged Trump’s campaign, out of their remarks.

They said with Trump’s heated rhetoric that used to compare undocumented immigrants to “animals” and his slight that they are “poisoning the blood of our country,” detractors did not need to reach too far to find parallels to Nazi Germany.

Stephen Miller, who Trump tapped to be his deputy chief of staff of policy, specifically used the word “camps” to describe holding facilities that he hoped the military could put together for immigrants.

Tom Homan, who served as the acting director of Immigration and Customs Enforcement and is chosen by Trump to be in charge of the US borders, was no stranger to such language.

“It’s not gonna be a mass sweep of neighborhoods,” he said in an interview earlier this week. “It’s not gonna be building concentration camps. I’ve read it all. It’s ridiculous.”

Becoming a little more forthright about the new government’s aggressive deportation plans, Homan likened the early days of the Trump administration to the initial invasion of Iraq in 2003.

“I got three words for them – shock and awe,” he said. “You’re going to see us take this country back.”

Trump made immigration a central element of his 2024 presidential campaign but unlike his first run, which was mainly focused on building a border wall, he has shifted his attention to interior enforcement and the removal of undocumented immigrants already in the United States.

People close to the US president and his aides are laying the groundwork for expanding detention facilities to fulfill his mass deportation campaign promise.

The businessman-turned-politician deported more than 1.5 million people during his first term.

The figure do not include the millions of people turned away at the border under a Covid-era policy enacted by Trump and used during most of Biden’s term.

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