Household Savings Rise to 21.7% of GDP, Food Inflation Turns Negative in FY26
Savings Rate Strengthens as Government Pushes Income Growth and Stability
New Delhi, March 17: Household savings as a share of India’s GDP have increased to 21.7% in 2024-25, up from 20% in 2022-23, according to the latest GDP estimates based on the revised base year of 2022-23, the Parliament was informed on Tuesday.Minister of State for Finance Pankaj Chaudhary, in a written reply to the Rajya Sabha, highlighted that household savings remain a critical pillar for financing investments in the economy while also enhancing financial resilience at the individual level.
He noted that a series of policy initiatives undertaken in recent years are expected to sustain this upward trend. These include efforts to improve ease of doing business, expand skilling programmes, generate employment, promote inclusive human resource development, and strengthen infrastructure. These measures are aimed at supporting long-term growth in household income and savings.
Tax Relief and GST Changes Expected to Boost Disposable Income
The government’s recent fiscal measures are also expected to contribute to higher savings and consumption levels. Chaudhary pointed to policies such as income tax exemption for annual incomes up to Rs 12 lakh and GST rate rationalisation, which are designed to increase disposable income.According to the minister, these steps are likely to support higher household consumption, boost savings and investments over the medium term, and reduce dependence on credit.
Food Inflation Declines, Fuel Prices Show Mixed Trends
Addressing inflation trends, Chaudhary stated that there has been no food or fuel inflation during FY 2025-26 so far.Retail food inflation averaged -0.98% during April to January of FY26, a sharp decline from 7.3% recorded in FY25. This indicates a significant easing in food price pressures during the current financial year.
On fuel prices, the minister clarified that the new Consumer Price Index series does not include a separate fuel category. However, based on Wholesale Price Index data, average fuel inflation stood at -3.16% during the same period.
He added that while global crude oil prices, including the Indian basket, had been on a declining trend over the past year, recent geopolitical tensions in West Asia have pushed prices above the $100 per barrel mark.
Multiple Factors Continue to Influence Food and Fuel Inflation
Chaudhary emphasized that food and fuel inflation are shaped by both domestic and global factors. Food prices are primarily influenced by agricultural output, which depends on monsoon performance, weather conditions, and seasonal supply variations.Other contributing factors include input costs such as fertilisers, energy, and labour, along with supply chain efficiency, transportation, and storage infrastructure.
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