Economy

Experts bat for sops to boost savings

As the budget mood sets in in the country, there are huge expectations that the Union Finance Minister Arun Jaitley may announce several measures for household savers to boost domestic investments, including new financial saving instruments.

India’s needs for overall investments, particularly in infrastructure sector, are humongous.

“While funding for infrastructure ought to be largely through domestic sources, we cannot deny the importance of attracting global funds as well to finance this sector,” said Shubhada Rao, Senior President & Chief Economist, YES Bank. ``Over dependence on global savings to fund India’s domestic investment needs may put undue pressure on current account balance, and, as such, institutional and fiscal incentive framework should be created to maximise gross domestic savings to finance growth,’’ he said.

Mr. Jaitley had recently stated that India could not solely rely on foreign investment. Mr. Rao said that there was need to increase public spending, in the first stage, while also converting domestic savings into infrastructural financing. The Finance Minister would do well to incentivise the household savings, he said. "Over three years we have seen a significant drop in the savings ratio. If he raises the limit of investments of tax savings instruments, the overall pool of savings like PPF will have a significant upside,” Ms. Rao pointed out.

“We expect the income tax slabs may be revised upwards to an extent in the Union Budget. This will help to offset the impact of inflation,” said Aditi Nayar, Senior Economist, ICRA. Ms. Nayar, however, felt that large revisions were not expected given limited fiscal space.

“While we need to increase aggregate savings, more importantly, we need to reverse the alarming decline in financial savings,” said Ajit Ranade, Chief Economist, Aditya Birla Group. “I strongly recommend introduction of a demat gold paper instrument along the lines of Kisan Vikas Patra.” This could potentially lead to significant reduction in physical gold import, he added.


Our code of editorial values

null
This article is closed for comments.
Please Email the Editor

Printable version | Jul 28, 2021 1:09:07 AM | https://www.thehindu.com/business/Economy/experts-bat-for-sops-to-boost-savings/article6920158.ece

Next Story