1. What is Savings?

National Savings?

What

are

the

components

of

Ans. Savings is the difference between income and consumption.

This money is usually kept in banks or used for investment
through which the saver earns an interest income or investment
returns. The individual income is divided into two, consumption
and saving i.e. some part of income is used to consumer goods
and services and the rest is saved. Thus, saving has a close link
with income level. It will change, if income changes. Simply that
part of income which is not used for consumption can be treated
as a saving. It can be further simplified with the following
equations:
Y= C+ S
Where,
Y = Income
C = Consumption
S = Saving
This equation suggested that the income is identically equal with
consumption and saving. This equation can be reframed as:
S =Y-C
National Savings
According to economic theories, the national savings of a nation
is the aggregate of public savings and private savings. Usually, it
is equivalent to the income of a country after subtracting the
government buys and expenditures. National savings may be
regarded as the amount of leftover money, which has not been
utilized or expended by the government.
According to a basic pattern of closed economy, any amount,
which has not been paid out, is considered as invested:
National Savings = Y-C-G = I

Components of National Saving

Private Saving
Public Saving
National savings is classified into public savings and
private savings. A new expression, T denotes tax payments
by customers, which is straightaway received by the
government as demonstrated below:
(Y-T-C) + (T-G) = I
Here private savings is calculated by subtracting
consumption or C from disposable income, which is
represented as (Y-T). The expression (T-G) refers to revenue
received by the government through taxes less government
expenses. This is termed as public savings and also called as
the Budget surplus.

2) a) Compute Indias savings rate(GDS as percent of

GDP at current market
Price) from 1980-81 to 2012-13.
YEAR
1980-81

GDP at Market
Price
1496.42

Gross Domestic
Savings
265.9

Savings Rate
(In %)
17.76907553

1981-82

1758.05

306.92

17.45797901

1982-83

1966.44

349.56

17.77628608

1983-84

2290.21

392.39

17.13336332

1984-85

2566.11

457.86

17.84257105

1985-86

2895.24

534.14

18.44890234

1986-87

3239.49

586.93

18.11797536

1987-88

3682.11

737.07

20.01759861

1988-89

4368.93

874.92

20.02595601

1989-90

5019.28

1067.3

21.26400599

1990-91

5862.12

1344.08

22.92822392

1991-92

6738.75

1435.3

21.29920237

1992-93

7745.45

1646.21

21.25389745

1993-94

8913.55

1929.94

21.65175491

1994-95

10455.9

2466.68

23.59127383

1995-96

12267.25

2892.65

23.58026453

1996-97

14192.77

3183.87

22.43304161

1997-98

15723.94

3797.9

24.15361544

1998-99

18033.78

4181.59

23.18754027

1999-00

20231.3

5168.46

25.54685067

2000-01

21774.13

5155.45

23.67695058

2001-02

23558.45

5853.75

24.84777224

2002-03

25363.27

6562.29

25.87320168

2003-04

28415.03

8237.75

28.9908193

2004-05

32422.09

10507.03

32.40701016

2005-06

36933.69

12351.51

33.44239365

2006-07

42947.06

14859.09

34.59861979

2007-08

49870.9

18363.32

36.82171366

2008-09

56300.63

18026.2

32.01775895

2009-10

64778.27

21823.38

33.68935293

2010-11

77841.15

26217.42

33.6806689

2011-12

90097.22

28244.59

31.34901388

2012-13

101132.81

30434.74

30.09383404

Graphical Representation
Graph Plotting GDP (At Market Price), Gross Domestic Savings and
Gross Domestic Savings as percentage of GDP
120000
100000
80000
60000
40000
20000
0

GDP at Market Price

Gross Domestic Savings

Total
40
35
30
25
20
15
10
5
0

Total

2) B) Also examine the savings rate (as percent of GDP) of

Indias households,
private corporate sector and public sector separately.
YEAR

HOUSEHOLDS

1980-81

GDP(Market
Price)
1496.42

181.16

SAVINGS RATE
(In %)
12.10622686

1981-82

1758.05

190.13

10.81482324

1982-83

1966.44

219.72

11.17349118

1983-84

2290.21

269.55

11.76966304

1984-85

2566.11

327.96

12.7804342

1985-86

2895.24

366.66

12.66423509

1986-87

3239.49

421.11

12.9992684

1987-88

3682.11

573.04

15.56281589

1988-89

4368.93

670.63

15.34998272

1989-90

5019.28

829.85

16.5332478

1990-91

5862.12

1086.03

18.52623283

1991-92

6738.75

1056.32

15.6753107

1992-93

7745.45

1279.43

16.51847214

1993-94

8913.55

1514.54

16.99143439

1994-95

10455.9

1871.42

17.89822014

1995-96

12267.25

1985.85

16.18822474

1996-97

14192.77

2246.53

15.82869306

1997-98

15723.94

2841.27

18.06970772

1998-99

18033.78

3521.14

19.52524651

1999-00

20231.3

4388.51

21.69168566

2000-01

21774.13

4637.5

21.29821031

2001-02

23558.45

5452.88

23.14617473

2002-03

25363.27

5641.61

22.2432281

2003-04

28415.03

6575.87

23.14222438

2004-05

32422.09

7636.85

23.55446549

2005-06

36933.69

8689.88

23.52832874

2006-07

42947.06

9943.96

23.15399471

2007-08

49870.9

11183.47

22.42484094

2008-09

56300.63

13308.73

23.63868752

2009-10

64778.27

16307.99

25.17509344

2010-11

77841.15

18001.74

23.12625135

2011-12

90097.22

20547.37

22.80577581

2012-13

101132.81

22124.14

21.87632283

Graphical Representation

Graphical Representation of year wise Savings Rate, GDP (At

market Price) and Households.

Graph plotting GDP at market price, Households and Savings rate (Households as % of GDP)
120000
100000
80000

Sum of GDP(Market Price)

60000

Sum of Households

40000

Sum of Savings Rate(in %)

20000
0

Savings rate as % of GDP of Indias Household sector

30
25
20
Total

15
10
5
0

Year
198081
198182
198283
198384
198485

GDP At
Market Price
1496.42

Private Sector

Savings Rate

23.39

1.563063846

1758.05

25.6

1.456158812

1966.44

29.8

1.515428897

2290.21

32.54

1.420830404

2566.11

40.4

1.574367428

198586
198687
198788
198889
198990
199091
199192
199293
199394
199495
199596
199697
199798
199899
199900
200001
200102
200203
200304
200405
200506
200607

2895.24

54.26

1.874110609

3239.49

53.36

1.647172857

3682.11

59.32

1.611032805

4368.93

84.86

1.942352018

5019.28

118.45

2.359900225

5862.12

151.64

2.58677748

6738.75

203.04

3.013021703

7745.45

199.68

2.578029682

8913.55

298.66

3.350629098

10455.9

352.6

3.372258725

12267.25

591.53

4.822026126

14192.77

625.4

4.406468927

15723.94

660.8

4.20250904

18033.78

691.91

3.836744155

20231.3

872.34

4.311833644

21774.13

810.6

3.722766421

23558.45

769.06

3.264476228

25363.27

992.17

3.911837866

28415.03

1298.16

4.568568113

32422.09

2125.19

6.554759425

36933.69

2772.08

7.505559287

42947.06

3385.84

7.883752695

200708
200809
200910
201011
201112
201213

49870.9

4690.23

9.404743047

56300.63

4174.67

7.414961431

64778.27

5409.55

8.350871365

77841.15

6203

7.968792856

90097.22

6584.28

7.307972432

101132.81

7131.41

7.051529568

Graphical Representation

120000
100000
80000
60000
Sum of Savings Rate(in %)
40000
20000
0

Sum of Private Sector

Sum of GDp At Market Price

Savings rate as % of GDP of Indias private corporate sector

10
9
8
7
6
5
4
3
2
1
0

Total

Year
1980-81

GDP At Market Public Sector Savings Rate

Price
1496.42
61.35
4.09978482

1981-82

1758.05

91.2

5.187565769

1982-83

1966.44

100.04

5.087366002

1983-84

2290.21

90.3

3.942869868

1984-85

2566.11

89.5

3.487769425

1985-86

2895.24

113.22

3.910556638

1986-87

3239.49

112.46

3.4715341

1987-88

3682.11

104.71

2.843749915

1988-89

4368.93

119.43

2.733621276

1989-90

5019.28

119

2.370857972

1990-91

5862.12

106.41

1.815213609

1991-92

6738.75

175.94

2.610869968

1992-93

7745.45

167.09

2.157266524

1993-94

8913.55

116.74

1.309691425

1994-95

10455.9

242.66

2.320794958

1995-96

12267.25

315.27

2.570013654

1996-97

14192.77

311.94

2.197879625

1997-98

15723.94

295.83

1.881398683

1998-99

18033.78

-31.46

-0.17445039

1999-00

20231.3

-92.38

-0.4566192

2000-01

21774.13

-292.66

-1.34407207

2001-02

23558.45

-368.2

-1.56292116

2002-03

25363.27

-71.48

-0.28182486

2003-04

28415.03

363.72

1.280026803

2004-05

32422.09

744.99

2.297785245

2005-06

36933.69

889.55

2.408505622