Savings puzzle: Does the fall in financial savings show household distress?

A fall in net financial savings of households to a 47-year low as a proportion of the country’s gross domestic product (GDP) in 2022-23 has raised fears of there being a distress among people — fears the finance ministry has sought to dispel.

GDP, the widely accepted measure of a country’s economic health, is the combined value of all goods and services produced within its borders in a specified period. Net financial savings are gross financial savings minus financial liabilities.

So, if net financial liabilities declined to 5.1 per cent of GDP in 2022-23 — as seen in the Reserve Bank of India’s data released last week — it is important to see what is happening to gross financial savings