Veblen to blame.

"Net financial savings is at the lowest in decades, reaching 5.1 percent of gross domestic product (GDP) in Financial Year 2023 (FY23) compared to 7.2 percent FY22, according to data from the Reserve Bank of India (RBI). Annual financial liabilities of households rose by 5.8 percent of GDP in FY23, compared with 3.8 percent in FY22." BS. "This means that households have been largely borrowing to fulfill their consumption needs." The Wire. "In absolute terms, net household assets in FY21 stood at Rs 22.8 trillion. In FY22, it dropped to Rs 16.96 trillion. It further fell to Rs 13.76 trillion in FY23." Incorrect, said the Finance Ministry. "Household Savings/Nominal GDP has remained constant - from around 20.3% to 19.7% as of FY22." ET. It said that overall household financial savings at current prices, including financial, physical and jewellery grew at CAGR (compound annual growth rate) of 9.2% from 2013-14 2021-22, while the nominal GDP grew at a CAGR of 9.65% during the same period. "Households added Net Financial Assets of 22.8 lakh crore (22.8 trillion) in FY21, nearly 17 lakh crore in FY22 and 13.8 lakh crore in FY23." "Added" means added to previous assets, while "In absolute terms" means the total. Which one is fake? "The drop in net financial assets (also called net financial savings of households) in 2023 is largely due to a sharp increase in additional liabilities, which grew from Rs 5.9 lakh crore (Rs 5.9 trillion) in 2021-22 to Rs 15.8 lakh crore in 2022-23." TNIE. Not so, says the ministry, 62% of personal loans were for buying cars and real estate, both of which are collateralised. "Total passenger Vehicle Sales increased from 30,69,523 to 38,90,114 units" from FY22 to FY23 (April to May). SIAM. That is an increase of just 820,000 in the whole of the last financial year. According to industry estimates, around 46,000 - 47,000 luxury cars will be sold in India in the calendar year 2023. ET. "The Indian Council for Research on International Economic Relations (ICRIER) has estimated that farmers in the country have lost around Rs 40,000 crore (Rs 400 billion) after the government dumped wheat in the market in a bid to control surging inflation." The Wire. So, farmers will not be buying houses or luxury cars. "India's savings rate climbed steadily from below 10% to a peak of 37% in 2010-11." wrote Ajit Ranade. "The gross savings rate fell from 36.9% of GDP in 2010-11 to 30.2% in 2021-22." "In 2022-23, growth in household financial liabilities was a whopping 76%. These again rose from Rs 36 trillion in July 2022 to Rs 47 trillion in July 2023." This may be a result of the Veblen effect in which people are keen to buy pricey products the pricier they get, wrote Madan Sabnavis. "The typical age for acquiring an automobile has come down to less than 30 years, while that for a home is in the bracket of 3-35 years now." "The Veblen effect is even stronger when it comes to electronic goods like mobile phones and laptops; consumers of these usually prefer to buy the latest." The problem is loans have to be paid back. And Veblen won't save defaulters.