Household savings in India drop to 18.1% of GDP in FY24: CareEdge Ratings

India's household savings continued their downward trajectory for the third straight year, slipping to 18.1 per cent of GDP in financial year 2024 (FY24), as per CareEdge Ratings. The report added that Gross domestic savings declined to 30.7 per cent of GDP in FY24 from 32.2 per cent in FY15.

On the other hand, household financial liabilities surged to 6.2 per cent of GDP, nearly doubling over the past decade, reflecting growing reliance on credit amid consumption needs, the report observed.

It highlights that 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 rural demand recovery, the report added.

Rural consumer confidence, hovering around the neutral 100 mark, reflects a 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, as per the observations of the report.

On the inflation front, 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 keep overall food inflation in check. The upcoming Rabi harvest, healthy reservoir levels, and forecast of above-normal monsoon rains are expected to further support food price stability, the report added.

"Going ahead, RBI policy rate cuts, lower tax burden and continued easing of price pressures remain key tailwinds for the broad-based demand recovery," the report said. As per the government data, the Indian economy grew by 6.5 per cent in real terms in the recently concluded financial year 2024-25.