Anjali, a 28-year-old marketing professional, scrolls through her phone, eyeing the latest iPhone on an e-commerce app. The “Buy Now, Pay Later” option winks at her, no interest, easy EMIs. She hesitates, knowing her bank account is already stretched thin, but the temptation is too strong. “YOLO, yaar,” she mutters, clicking “Buy.” Across town, in a small village in Uttar Pradesh, Rajesh, a farmer, takes a quick loan via a mobile app to fund his daughter’s grand wedding. Both Anjali and Rajesh are part of a quiet shift sweeping India, a shift where saving, once a sacred habit, is fading into the background.
This is the story of millions of Indians, young and old, urban and rural, caught in a wave of rising aspirations and easy credit.
What’s Happening to India’s Savings?
The numbers tell a stark tale. In 2023, India’s net household savings dropped to a shocking 5.3% of GDP, the lowest in nearly 50 years. Just a decade ago, gross domestic savings stood at a robust 34.6%. By 2022–23, it had slumped to 29.7%, a four-decade low.
To put this in perspective, imagine a family that once saved ₹34 out of every ₹100 they earned, now saving just ₹5. That’s not just a dip, it’s a nosedive.
But where’s the money going? Indians aren’t exactly hoarding cash under their mattresses. Instead, they’re investing differently. Between 2021 and 2023, household investments in equities and mutual funds nearly doubled, from ₹1.02 trillion to ₹2.02 trillion. Gold savings hit ₹633.97 billion, the highest since 2011–12. Real estate, too, saw a post-COVID boom as people rushed to buy homes. Sounds good, right? Not quite. These investments have trade-offs. Gold and property are illiquid, you can’t easily turn them into cash during a crisis. The stock market? High returns, sure, but it’s a rollercoaster that can wipe out savings if you don’t play it smart.
Net financial savings, money left after subtracting loans and debts, plummeted from ₹23.3 lakh crore in 2020–21 to ₹14.2 lakh crore in 2022–23. That’s a drop of over ₹910 billion in just two years. Meanwhile, household debt is creeping up, hitting 6.4% of GDP in 2024, levels not seen since the global credit bubble of 2007.
Why Are We Saving Less? The Real Reasons
The Rise of Consumerism and Easy Credit
India is changing, and so are we. Today’s youth, Gen Z and millennials, are growing up in a world of opportunity, fast-paced tech, and shiny ads. Apps like Amazon, Flipkart, and fintech platforms make spending a breeze. “Buy Now, Pay Later” schemes, zero-interest EMIs, and instant loans are everywhere. Credit card usage and unsecured loans are skyrocketing. In semi-urban and rural areas, smartphones and e-commerce have sparked new dreams, new phones, holidays, lavish weddings, all funded by credit. Bas, ek swipe, aur sapna sach!
In villages, families are upgrading their lifestyles, often borrowing to keep up. Savings are shifting away from traditional bank deposits, which dropped from 43% to 35% of household savings over the past nine years.
Generational Shift in Mindset
Saving used to be a badge of honor in Indian households. Our parents and grandparents stashed away money in fixed deposits, post office schemes, or even dabba savings at home. But today’s generation sees saving as a sacrifice, not empowerment. Why save for tomorrow when you can live today? Social media fuels this FOMO (fear of missing out), pushing people to spend on experiences and gadgets to “keep up.” “When there’s no money to spend, where’s the question of saving?”
High inflation and stagnant incomes aren’t helping either, many are forced to dip into savings just to make ends meet.
Economic Pressures and Policy Gaps
Inflation has been a silent thief, shrinking real household incomes. Post-pandemic, prices of essentials like food and fuel have soared, leaving less to save. The RBI’s data shows financial liabilities growing faster than assets, 21.6% versus 12.4% annually from 2000 to 2022. Meanwhile, government policies haven’t done enough to incentivize saving. Tax breaks on savings schemes are limited, and interest rates on fixed deposits is left behind inflation. Compare this to countries like Singapore, where mandatory savings schemes like the Central Provident Fund ensure households save 20–37% of their income, fueling national investment.
Why This Matters
This isn’t just about empty bank accounts. Low household savings threaten India’s economic backbone. Here’s why:
National Investment at Risk: Household savings are the bedrock of India’s investment. Less savings mean banks have less money to lend for infrastructure, businesses, or startups. In the 2000s, high savings fueled India’s growth to near-China levels. Today, with savings at a 50-year low, private corporate investment is stagnating, and the government is left to pick up the slack. If this continues, India’s dream of becoming a developed nation could slip away.
Vulnerability to Crises: Low savings leave families exposed. Without a financial cushion, a medical emergency or job loss can push households into debt traps. Illiquid investments like gold or property won’t help when you need cash abhi. The rise in unsecured loans, think personal loans or credit card debt, means more families are one missed EMI away from financial ruin.
Widening Inequality: The savings crisis isn’t equal. Wealthier households can afford to invest in stocks or property, while poorer ones are stuck borrowing for basics. This deepens the wealth gap, with the top 1% needing just ₹1.44 crore to be in India’s elite, compared to ₹42 crore in the US. Meanwhile, rural families taking high-interest loans from fintech apps are at risk of falling into a debt spiral.
Global Context: India’s savings rate is now lower than many peers. China’s household savings rate is around 30%, and even debt-heavy economies like the US manage 7–8%. If India’s savings keep falling, we risk becoming overly reliant on foreign capital, which comes with strings attached, think higher interest rates or loss of economic control.
If This Continues..
If this trend persists, the future looks grim. Imagine an India where:
Economic Growth Stalls: With less savings to fund investment, GDP growth could slow to 3–4%, far below the 6–7% needed to become a $10 trillion economy by 2035. Job creation would falter, leaving millions of young Indians unemployed or underemployed.
Debt Crisis: Rising household debt could trigger a financial crisis, like the 2007 global credit bubble. Non-performing assets (NPAs) in India’s microfinance sector are already at ₹55,000 crore. A wave of defaults could cripple banks and fintech lenders, shaking the economy.
Social Unrest: Growing inequality and financial stress could fuel frustration, especially among the youth. Rural distress, already high, could worsen as families drown in debt, leading to protests or social instability.
Loss of Independence: Relying on foreign loans to plug the savings gap could erode India’s economic sovereignty. We’d be at the mercy of global lenders, who could dictate terms that prioritize their interests over ours.
What Can You Do?
Here’s how you can take control:
Rethink Spending: Before clicking “Buy Now, Pay Later,” ask: “Do I really need this?” Budget for essentials first, and save at least 10% of your income, even if it’s just ₹500 a month.
Diversify Savings: Don’t put all your eggs in one basket. Mix liquid savings (like fixed deposits or savings accounts) with long-term investments. Avoid high-risk stocks unless you’ve done your homework.
Educate Yourself: Learn about personal finance. Many Apps offer free tips on saving and investing wisely.
Push for Policy Change: Demand better savings incentives, higher interest rates, tax breaks, or schemes like Singapore’s CPF. Write to your MP or tweet about it. Collective voices matter!
What’s one practical step you can take today to boost your savings?
Share your answer in the comments or on social media with #TheBrink2028. The best idea wins a free 1-year subscription to TheBrink’s premium!
Leaked from the Future: What’s Next for India’s Savings Crisis?
Want to know how this crisis could unfold by 2030?
Future Simulations: Will India face a debt crisis like the US in 2008? Or could a bold policy shift reverse the savings decline?
Hidden Risks: The shocking impact on rural households and small businesses that no one’s talking about.
Global Scenarios: How India’s savings crisis could ripple through Asia and beyond.
Actionable Strategies: Exclusive tips to protect your finances in an uncertain future.
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This article is for every Indian dreaming of a better tomorrow. Saving isn’t just about money, it’s about freedom, security, and building a stronger India. Let’s bring back the habit of saving, one rupee at a time. Chalo, abhi shuru karte hain!
-Chetan Desai for TheBrink2028
