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New Delhi: India’s gross domestic savings fell to 30.7% of GDP in FY24, down from 32.2% in FY15, driven by a sustained decline in household savings, CareEdge Ratings said in a recent report.
Household savings, which form the backbone of domestic capital formation or investment in the economy, dropped for a third straight year to 18.1% of GDP in FY24, raising concerns about the long-term resilience of the savings base in an economy heavily reliant on domestic consumption and investment.
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At the same time, gross financial liabilities of households surged to 6.2% of GDP in FY24, nearly double the level seen a decade ago, the rating agency said in its ‘Economic Pathway June 2025’ report.
Gross domestic savings refers to the share of a nation’s income that is set aside rather than spent on final consumption, typically expressed as a percentage of GDP.
It serves as a key indicator of a country’s financial health and its ability to fund future investment and drive long-term economic growth.
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According to a 30 May note from the Union ministry of statistics and program implementation, real GDP (at constant prices) is projected to reach ₹187.97 trillion in FY25, up from ₹176.51 trillion in FY24 (First Revised Estimates), marking a growth of 6.5%. Real GDP strips out the effect of inflation to reflect a more accurate measure of economic output.
Nominal GDP (at current prices) is estimated at ₹330.68 trillion for FY25, compared to ₹301.23 trillion in the previous year, reflecting a growth of 9.8%.
Meanwhile, the Centre’s capital expenditure rose to ₹10.5 trillion in FY25, surpassing the revised estimate of ₹10.2 trillion, the CareEdge Ratings report said.
Both the Centre and 20 major states saw a rebound in capex during the second half of the year, reversing the contraction recorded in the first half, it added.
The report also noted a strong start to FY26, with the Centre achieving 14.3% of its budgeted capex in April, compared to 8.9% in the same month last year.
“The encouraging trends in public capex remain positive for the investment scenario in the economy,” it added.
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The Centre has earmarked ₹11.21 trillion for capital expenditure in FY26, a 10% increase over the previous fiscal.
In addition, states will receive ₹1.5 trillion in special assistance for capital spending during the fiscal year.
This takes the Centre’s effective capital expenditure to a projected ₹15.5 trillion in FY26, up from ₹13.18 trillion in FY25.
Effective capital expenditure includes outlays that may not be classified strictly as capital spending but contribute to asset creation, such as allocations under the rural employment guarantee scheme and infrastructure assistance to states.
CareEdge Ratings also expects non-petroleum exports to contract by 0.8% in FY26, after growing 6.1% in FY25.
According to data from the ministry of commerce and industry, India’s non-petroleum exports hit a record $374.1 billion in FY25, marking a 6% increase over the previous year, driven by robust gains in electronic goods, engineering products, pharmaceuticals, and textiles.
Electronic goods led the surge, with exports soaring 32.5% year-on-year.
“India’s non-petroleum goods exports growth has remained feeble but in the positive territory,” the report said.
“Petroleum exports growth has continued to contract amid lower oil prices,” it added.
The rating agency noted that rural consumer confidence hovered around the threshold of 100 between September 2023 and May 2025, with values over 100 denoting optimism, while urban consumer confidence remained well below that mark during the same period.
“Favourable agricultural prospects, easing food inflation and upbeat rural wage growth have aided the rural demand scenario,” it said.
“Going ahead, (impact of) RBI policy rate cuts, lower tax burden and continued easing of price pressures remain key tailwinds for the broad-based demand recovery,” it added.
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