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Research on Rural Savings in India


  • Desai B M


Rural savings are determined by both ‘ability’ and ‘incentives’ to save. All except two studies reviewed emphasize ‘ability’, though some qualitatively analyze ‘incentives’. This relative neglect is justified when positive substitution effect of the ‘incentives’ is off-set by its negative income effect. Such ‘total’ effect does not necessarily arise. ‘Incentives’ variable can be incorporated in both cross-sectional and time-series models, as shown in the two exceptions. Past time-series estimates of rural savings are characterized by reporting, measurement, and analytical weaknesses. Some of these lead to underestimation of these savings. This, however, does not mean that all of the additional savings are mobilizable by the financial institutions. This is because rural households hold their savings ion monetized as well as non-monetized forms. Moreover, some of the monetized savings are held in the form of physical assets. Thus, only those monetized savings which are invested in financial assets of the informal rural financial market can be considered as potentially mobilizable by the financial institutions. To identify appropriate policies by these institutions, further literature may be developed by promoting and researching programmes with better rates of return on financial savings, besides those with opportunities to transact other businesses.

Suggested Citation

  • Desai B M, 1982. "Research on Rural Savings in India," IIMA Working Papers WP1982-11-01_00518, Indian Institute of Management Ahmedabad, Research and Publication Department.
  • Handle: RePEc:iim:iimawp:wp00518

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