Savings behaviour in India / by K. Krishnamurty and P. Saibaba c.2

The institute of Economic Growth had earlier started a series of Occasional Papers as part of its research programme. These papers presented results of research work relating to current economic prob lems in India by the research staff and other scholars. The present Series which is called Occasional Papers: New Series has been star ted with the same purpose as that of the earlier Series. The basic idea is to present the findings of socio-economic research by Faculty members and Visiting Fellows to the professional scholars as well as the wider non-professional community.

The present paper entitled "Savings Behaviour in India" by Pro fessor K. Krishnamurty and Mr. P. Saibaba of the Institute attem pts to explore one of the major dimensions of the working of the Indian economy. It analyses the saving behaviour in India in the last three decades. The paper has been prepared in the Applied Eco nometric Section of the Institute funded by the Reserve Bank of India.

The rate of savings in India has shown a secular rise in the last three decades, with year to year fluctuations. The rise has been dramatic in the late seventies. This study analyses in a comprehen sive manner the factors which explain this phenomenon. In parti cular, it throws light on the impact of shifts in the terms of trade bet ween the agricultural and non-agricultural sectors, of the growth of income and inflation and of other related factors on the rate of sav ings. A novel feature of the study is the estimation of the saving pro pensity differentials between the agricultural and non-agricultural sector from aggregate time series data, in the absence of independent series for each of the sectors.