India's savings rate to dip to 30%: India Ratings
The national savings rate will slip further to 30 per cent or so this fiscal, from 30.8 per cent of the GDP last fiscal, if the advance estimates of national income is anything to go by, says India Ratings.
Earlier in the day, the Central Statistical Organisation (CSO) said the national savings rate may plunge to a decade year low this fiscal, which had slipped to an eight year low of 30.8 per cent last fiscal.
According to India Ratings Chief Economist and Public Finance Head Devendra Kumar Pant, the gross domestic savings will slip by 80 basis points to 30 per cent this fiscal.
"The estimates portray a weak picture of stabilising twin deficits. While the estimated investment rate this fiscal is likely to be similar to FY12, an 80 bps rise in the share of consumption expenditure (private and government) will reduce the savings rate further, leading to further widening of the current account deficit," Pant said in a note.
The domestic saving rate had touched a high of 36.9 per cent in FY08 but since then has steadily fallen. It fell to 33.8 per cent in FY10 and rose a tad in FY11 to 34 per cent but again fell to 30.8 of GDP in FY12.
A major impact of a low savings rate, considered as one of the biggest economic strengths, will be a higher current account deficit (CAD), which is already burgeoning to historic high of 5.3 per cent in Q2.
The CSO, in its advance estimates, pegged GDP growth at
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