INSUBCONTINENT EXCLUSIVE:
financial surpluses have shrunk in the last couple of years.A recent Reserve Bank of India (RBI) report said that although currency and
deposits constitute more than half of the total assets held by households, their share in total assets have been declining over time and are
indicative of the growing risk appetite and portfolio diversification, while the major liability in household balance sheets are loans and
borrowings, primarily from other depository corporations (ODC) and other financial corporations (OFCs), the report said.According to
official data, household financial assets and their surplus showed an uptick during 2015-16 on account higher currency and deposits
supported by high income growth as India's gross domestic product (GDP) growth touched 8 per cent for the first time during the current
In 2017-18, both household assets and liabilities expanded but the growth in the latter outpaced the former resulting in further moderation
in surplus," as per the report.The data suggested that households are connected the most with financial corporations which act as
intermediaries to channel their surpluses to deficit sectors.The report said that "demonetisation had a significant but transitory impact on
the instrument used for acquisition of financial liabilities during 2016-17, and a quick reversal in the following year
Increased number of insurance policies and mutual funds units were issued during 2016-17."Talking of the governments, both at the Centre and
states, the report said that on the governments' assets side, equity has the largest share, which is reflective of participation of the
central government in corporations, both financial and non-financial
This is followed by deposits held with ODCs, more pronounced in the case of state governments which have accumulated large cash balances,
reflecting poor cash management.The financial resource gap of the general government sector remained stable during the period 2012-13 to
2016-17, widening somewhat during 2017-18
Debt securities make up almost three-fourths of total financial liabilities
These debt securities act as a safe haven for investors and are statutorily mandated for scheduled commercial banks (SCBs) under the
liquidity coverage ratio (LCR) in addition to the minimum statutory liquidity ratio (SLR) requirement.In its conclusion, the report noted
that in the recent years, the general government has emerged as the major deficit sector in the economy exhausting a major share of the
surplus of households.Get Breaking news, live coverage, and Latest News from India and around the world on TheIndianSubcontinent.com
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