THE DETERMINANTS OF PRIVATE SAVING IN INDIA Athukorala, Prema-chandra; Sen, Kunal

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Authors
Athukorala, Prema-chandra ; Sen, Kunal
Appears In
World Development
Subjects
Saving and investment - India.; macroeconomic policy; saving rate
Audience
Academic; Trade
Summary
This paper examines the determinants of private saving in the process of economic development, in the light of the Indian experience during the period 1954 - 1998. The methodology involves the estimation of a saving rate function derived within the life cycle framework while paying attention to the structural characteristics of a developing economy. It is found that the saving rate rises with both the level and the rate of growth of disposable income and the magnitude of the impact of the former is smaller than that of the latter. The real interest rate on bank deposits has a significant positive impact, but the magnitude of the impact is modest. Public saving seems to crowd out private saving, but less than proportionately, suggesting that public policy can influence the national saving rate. Among the other variables considered, the spread of banking facilities in the economy and the rate of inflation seem to have a positive impact and changes in the external terms of trade and migrant remittances a negative impact on private saving.
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http://trove.nla.gov.au/work/39142
Work ID
39142

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