India’s household savings continued their downward trajectory for the third consecutive year, slipping to 18.1 per cent of GDP in the financial year 2023–24 (FY24), according to CareEdge Ratings. The report added that gross domestic savings declined to 30.7 per cent of GDP in FY24, down from 32.2 per cent in FY15. Meanwhile, household financial liabilities surged to 6.2 per cent of GDP — nearly doubling over the past decade — reflecting a growing reliance on credit to meet consumption needs, the report noted.
Despite the concerning savings trend, rural India offers a silver lining. Wage growth for rural male workers rose by 6.1 per cent year-on-year in February, outpacing rural inflation for the fourth consecutive month. This, along with easing food inflation and favourable agricultural prospects, is supporting a recovery in rural demand, the report stated.
Rural consumer confidence, hovering around the neutral 100 mark, reflects cautious optimism. In contrast, urban consumer confidence remains in pessimistic territory, though expectations for the year ahead remain upbeat across both segments, the report added.
In the broader economy, labour cost growth for major IT firms has slowed significantly — from a peak of 26 per cent in Q3 FY23 to just 4 per cent in Q3 FY25 — highlighting a broader trend of cost rationalisation in the corporate sector, according to the report.
On the inflation front, the Consumer Price Index (CPI) eased to 3.2 per cent in April 2025, the lowest since August 2019. However, high prices of edible oils (17.4 per cent) and fruits (13.8 per cent) continue to weigh on overall food inflation. The upcoming Rabi harvest, healthy reservoir levels, and a forecast of above-normal monsoon rains are expected to further support food price stability, the report added.
“Going ahead, RBI policy rate cuts, a lower tax burden, and continued easing of price pressures remain key tailwinds for a broad-based demand recovery,” the report said. As per government data, the Indian economy grew by 6.5 per cent in real terms in the recently concluded financial year 2024–25.
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