Net house­holds fi­nan­cial as­sets @ 8.3% of GDP in Q2, 2017-18

Banking Frontiers - - Research Notes - Household Assets & Liabilities -

An RBI study on the quar­terly es­ti­mates of house­holds’ fi­nan­cial as­sets and li­a­bil­i­ties for the pe­riod Q1:2015- 16 to Q2:2017-18, us­ing flow of funds ap­proach and based on in­for­ma­tion avail­able in fi­nan­cial state­ments of coun­ter­party sec­tors, show some in­ter­est­ing ob­ser­va­tions. In­dian house­holds are gen­er­ally net savers and sup­pli­ers of fi­nan­cial re­sources for the rest of the econ­omy. How­ever, net fi­nan­cial as­sets of the house­holds turned neg­a­tive (-7.3% of gross do­mes­tic prod­uct) in the third quar­ter of 2016-17, re­flect­ing the tran­si­tory ef­fects of de­mon­e­ti­za­tion. With sub­se­quent re-mon­e­ti­za­tion, the house­hold sec­tor’s net fi­nan­cial as­sets turned around and in the fourth quar­ter they amounted to 14.8% of GDP. In 2017-18, net fi­nan­cial as­sets of house­holds are es­ti­mated at 8.3% of GDP in Q2, up from 5.8% of GDP in Q1.

The study says the quar­terly rate of net fi­nan­cial as­sets dis­plays a high de­gree of volatil­ity, re­veal­ing the shifts in pref­er­ences of house­holds for the var­i­ous in­stru­ments on both the as­sets and li­a­bil­i­ties side, which usu­ally does not get cap­tured in an­nual data.

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