The IMF Working Papers series is designed to make IMF staff research available to a wide audience. Almost 300 Working Papers are released each year, covering a wide range of theoretical and analytical topics, including balance of payments, monetary and fiscal issues, global liquidity, and national and international economic developments.
This paper discusses recent trends in Indian saving behavior and reviews policy options to increase domestic saving. In the absence of forceful policy measures, private saving would continue to rise gradually, but probably not by enough to finance the government’s growth target of 7 percent over the next decade. The most promising way to boost domestic saving would be through increased public saving and a strong structural reform program, including financial liberalization, which would initiate a virtuous growth-saving circle. To increase the efficiency of the savings allocation, particular attention should be paid to long-term saving instruments.