ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Economic Reforms and Rate of Saving in India

Economic Reforms and Rate of Saving in India Premachandra Athukorala Kunal Sen This paper contributes to the current debate on the decline in the domestic saving rate in India in the aftermath of the liberalisation reforms initiated in 1991. It is found that the decline in the saving rate has predominantly originated in household physical saving, the main subcategory of saving which is common to both saving and investment estimates prepared by the CSO. Given that the persistent decline in household physical saving has occurred in a context where private corporate investment have exhibited strong growth and that there is no evidence of an intrinsic bias in the new policy regime against the unorganised sector, we suspect that the decline in the saving rate is a statistical artefact resulting from an underestimation of total gross domestic capital formation.

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