Business Daily from THE HINDU group of publications
Thursday, May 17, 2007
ePaper
Business Daily from THE HINDU group of publications Thursday, May 17, 2007 ePaper |
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Opinion
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Letters Encourage savings
A series of articles in your paper — "India's young savers will prove McKinsey wrong" (Business Line, May13), and "Who is doing the saving and investing" and "How countries compete" (both in the issue of May 15) — have all focussed on the critical issue of changing patterns in savings and investments in the last few years. That there is a shift in who is doing the saving has been acknowledged and is accepted. The challenges for the policy-makers are to capture this change, understand the factors behind it and generate a model that can impact at the macro level. There is a clear shift in focus from agro-based industries to ITeS and BPOs and industrial establishments. Hence, the savings are not from agriculturists but from workers, executives and generally the white-collared and blue-collared community. This has been encouraged by the government's policy initiatives to make our country "competitive". But what should worry the policy-makers is the impact this change makes on capital formation at the grassroots level. Indians are generally known for their thrifty habits and their savings, especially in the rural and semi-urban areas, form the seed capital of many a retail outlet, enterprise or small shop. Such savings have supported the active functioning of small enterprises and any deceleration in savings growth at this micro-level could seriously erode capital formation ability. Given the near absence of institutional support at this level (major banks' focus is mostly on big-ticket investments), unless a dedicated effort is made immediately to address this issue, we may be seriously damaging our basic economic structure. V. Balakrishnan
Letters to the editor and contributions can be sent by e-mail to: bleditor@thehindu.co.in
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