The gross domestic savings rate declined from 33.7 per cent in 2010-11 to 31.3 per cent in 2011-12 and to 30.1 per cent in 2012-13 (the latest year for which data is available). The major reasons for the decline in the rate of gross domestic savings include; moderation in the profit of the private corporate sector, greater dissaving of public authorities in 2011-12 and decline in household savings, in particular, financial savings, largely on account of persistent inflation.

The Union Budget 2014-15 proposed measures to revitalize savings, especially of the households that, inter alia, included; raising the investment limit under Section 80C of the Income Tax Act from ₹ 1 lakh to ₹ 1.5 lakh and raising the income tax exemption limit by ₹ 50000 for individual taxpayers. Kisan Vikar Patra has been re-launched to mobilize small savings. The launch of “Pradhan Mantri Jan Dhan Yojana” would contribute to greater financial inclusion and better mobilization of household financial savings. Greater public saving is sought to be achieved, inter alia, through efforts at fiscal consolidation.

This was stated by Shri Arun Jaitley, Finance Minister in written reply to a question in the Lok Sabha today.

Tax incentives under Section 80C and expanded tax exemptions aim to boost household savings and financial inclusion. Decline in the gross domestic savings rate is attributed to lower corporate profits, greater public dissaving and reduced household financial savings due to inflation. The Union Budget 2014-15 proposes measures to boost savings: increasing the investment deduction under Section 80C, raising the individual tax exemption threshold, reintroducing Kisan Vikas Patra to mobilize small savings, promoting financial inclusion through Pradhan Mantri Jan Dhan Yojana, and pursuing fiscal consolidation to increase public saving.