Economic analysis of household savings behaviour: Insights from India

Abstract

This research paper examines the determinants of household savings behaviour using data from India's 66th round of the National Sample Survey Organization (NSSO). The primary aim is to identify the key factors influencing household savings and their broader impact on the nation's economic growth and development. Household savings are essential for capital formation and economic growth, making it crucial for policymakers and economists to understand their dynamics. We employ robust latent class analysis techniques with NSSO data to uncover insights. Our findings highlight several influential factors in household savings behaviour. Income emerges as a significant determinant, with higher-income households saving more, affecting wealth distribution and societal inequality. The Study also explore the interplay of demographic factors, such as age, education, and family size, showing that better-educated households with smaller family sizes tend to save a larger portion of their income. Regional disparities in savings behaviour are another key aspect we address. India's diverse landscape comprises varying cultural, traditional, and economic backgrounds. We emphasize the importance of considering regional differences when designing savings promotion policies. Urban-rural divides, access to financial institutions, and local economic conditions all impact household savings rates. To enhance the accessibility and credibility of our findings, we present them alongside supporting tables and references to published reports. This holistic analysis contributes to existing knowledge and equips policymakers with actionable insights for more effective savings-promoting policies, ultimately fostering sustainable economic growth. In conclusion, our research underscores the multifaceted nature of household savings behaviour in India. It offers a nuanced understanding of the determinants shaping these patterns. This knowledge serves as a valuable resource for policymakers, economists, and stakeholders, empowering them to promote inclusive and sustainable economic development for the nation.