Spreading more worries over fiscal stance, credit rating agency, India Ratings and Research (Ind-Ra) has said that declining household savings may lead to wider current account deficit (CAD) and rise in the interest rates.
According to the report, gross households’ financial savings net of financial liabilities surged at an annualised rate of 9.8% to Rs 11.29 lakh crore in FY18 from Rs 6.43 lakh crore in FY12, while net central government, state government and EBR borrowings increased at an annual growth of 10.7% to Rs 11.55 lakh crore in FY18 from Rs 6.28 lakh crore in FY12. Besides, during the same period, states' net borrowing grew at an annualised rate of 33% followed by extra-budgetary resources growing at 15.1% and that of the Centre at 0.5%.
The credit rating agency further noted that the ratio of gross household financial savings net of financial liabilities compared with net borrowings of the Centre and the states and their extra-budgetary resources slipped to 0.97x in FY18 from 1.02x in FY12 and 1.38x in FY16.