So, in a developing country like India. Saving has achieved a greater importance in the Indian Economy, particularly with the advent of planning the state has become the main instrument of welfare. The socio-economic progress of the country increasingly depends on saving and investment. Saving has generally been held one of the major determinants of economic …show more content…
The issues relating to the estimation of gross domestic savings and household savings, in particular, have assumed immense significance in the recent times. These issues are very relevant when the Indian economy has commenced its journey on a high growth trajectory. The Eleventh Five Year Plan (2007-08 to 2011-12) has set high growth targets, which pre-supposes robust savings and investment rates. In India, the methodology adopted for estimating savings and investment has evolved over the years in tune with the international guidelines and improvements in the domestic statistical system. Nonetheless, it is felt that there is a need to critically review the available estimates of savings and investment in the Indian economy with respect to data base, methods of estimation, reliability and interpretational significance. The compilation of savings of the household sector continues to pose a challenge in view of the heterogeneity and residual character of this sector in the National Accounts Statistics. While countries like the US and the UK have established mechanism to directly estimate the savings of their respective household sector through income-expenditure surveys, India follows a unique way of estimating the household savings indirectly by a method, which is a mix of the flow-of-funds