Indian households are shifting their savings from traditional bank deposits to alternative assets like property and equities, driven by easier access to retail loans and a younger, tech-savvy population. This trend has led to a decline in bank deposit growth, with credit growth outpacing deposits, prompting concerns about monetary policy effectiveness. As the Reserve Bank of India is expected to cut rates, challenges persist due to asymmetric monetary transmission and reduced liquidity from government cash management measures.
India's K-shaped consumption pattern is evolving, with affluent consumers experiencing fatigue while lower-income segments benefit from increased rural demand and public spending, according to a UBS report. Key factors influencing this shift include strong monsoons, rising public expenditure, and changes in household savings. As the country aims for sustainable growth, challenges such as inflation and job creation remain critical.
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