The effects of the global financial meltdown are not restricted to the corporate sector, but have also precipitated to the savings and investment pattern of Indian households.
Last fortnight, the Reserve Bank of India presented its annual report for the year July 1, 2008 to June 30, 2009. As per the report, the gross financial savings of households increased by a marginal 4.3 per cent in 2008-09 compared to 10.1 per cent in the preceding year.
As a percentage of the gross domestic product at current market prices, the gross financial savings of households plummeted from 15.8 per cent in 2006-07 to 15.2 per cent in 2007-08 and was at 14 per cent in 2008-09.
As per the financial saving of the household sector (gross) data, investments in shares and debentures crash-ed from Rs 89,134 crore (Rs 891.34 billion) in 2007-08 to Rs 19,349 crore (Rs 193.49 billion) in 2008-09.
Mutual funds, too, took a hit in 2008-09. Investments in MFs, other than UTI MF, decreased by Rs 10,478 crore (Rs 104.78 billion) in 2008-09 against an inflow of Rs 56,799 crore (Rs 567.99 billion) in 2007-08.
Investments in provident and pension funds remained fairly steady -- Rs 70,891 crore (Rs 708.91 billion) was invested in 2008-09 as compared to Rs 70,878 crore (Rs 708.78 billion) in 2007-08. Investment in government securities continued to be slow, while there was a pronounced increase in small savings investments.