After normalcy returning to the country after COVID-19, stuck demands have suddenly come to the fore, and in the meantime, the effect of rising prices has been seen on family savings. During the financial year of 2021-22, family savings dropped by 19%, while it had increased by 31.3% during 2020-21. During the last two years, family savings have increased only by 6.3%. Meanwhile, bank deposit has reduced, but investments in assets like equity have gone up rapidly.
As per Bank of Baroda’s Research Analyst, Aditi Gupta, the biggest reason behind the family savings increasing during 2020-21 was that because of the lockdown, consumption had dwindled for a few months, due to which, the share of savings in people’s income augmented. But after the prohibitions of COVID-19 have come to an end, people are spending their money without thinking much about the prices of goods.
Madan Sabanvis, Chief Economist, Bank of Baroda, has said that after a long duration of restrictions, the amount of money being spent has shot up suddenly, and meanwhile, inflation has gone up too, and the festive season is going on as well. As a result, people are spending more by paying higher prices. He added that with this, while the economy is getting supported, savings will reduce.
It also noteworthy that savings during 2021-22, in the form of investments in equity, mutual funds, and small saving schemes has doubled in comparison to 2020-21.