Indians saved more in FY21; jobs back in FY22: SBI

The job losses and economic hardships of the pandemic period of FY21 drove Indians to save the most in the last two decades. As the pandemic weaned, jobs returned in FY22, a research report prepared by State Bank of India says.

The analysis of the RBI’s savings data by SBI Research found the financial saving in the household sector – the most important source of funds – surged by 3.6 percentage points to 11.5% of gross national disposable income (GNDI) deposits in FY21, the highest in over two decades. Bank deposits grew by 2.1 percentage points to 6.3% of GNDI while insurance funds and provident and pension funds grew 0.8 and 0.3 percentage points respectively, the report says.

In absolute terms, the financial saving of the household sector increased by ₹6.91 lakh crore during FY21. While increase in deposits accounted for ₹3.4 lakh crore, insurance, provident and pension funds cumulatively added another ₹1.91 lakh crore during the period.

“While the formal jobs declined during the pandemic financial savings increased in FY21. The reduction in discretionary spending amidst the pandemic and the associated forced saving as well as a surge in precautionary saving on concerns relating to income flows in the near-term boosted saving by households. Most noticeable increase apart from deposits were seen in insurance, provident and pension funds, which is a welcome behavioural change,” says Ghosh in the report.

The report analyses the data released Employee Provident Fund Organisation (EPFO) and estimates the actual net new payroll (new employees who got added to EPFO database) as 60 lakh for FY22, which is 16 lakh more than the actual net new payroll generated in FY21.

SBI Research points to a massive jump of 1.47 lakh in the National Pension Scheme (NPS) data compared to last year and concludes that cumulatively, the total payroll generation of EPFO and NPS was almost 17.7 lakh more than the previous fiscal (in FY22).

The report analyses the employee expenses data for over 2,000 listed companies and finds that barring the very small companies (turnover up to ₹50 crore) employee expenses have increased in double digits in FY22. In FY21, barring big companies (turnover more than ₹1,000 crore) employee expenses had declined in across all companies. This turnaround indicate that companies has started to hire in FY22, Ghosh says.