Social Identity

Saving Behaviour in India: Understanding the differences across castes

  • Blog Post Date 01 March, 2013
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Viktoria Hnatkovska

University of British Columbia

hnatkovs@interchange.ubc.ca

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Amartya Lahiri

University of British Columbia

alahiri@interchange.ubc.ca

The past three decades in India have witnessed a sharp reduction in the historically large gaps in the education levels, occupation choices and wages of the backward castes relative to the rest of the population. This paper examines how these changes have impacted the saving behaviour of the two groups by analysing NSS household survey data on consumption and employment/unemployment between 1983 and 2010. The results suggest that while the saving rates of backward castes exceeded that of non-backward castes in 1983, this excess saving declined during 1983-2010 period. A decomposition of consumption into durables and non-durables reveals that this trend also extends to durable goods consumption of the two groups. A decline in wage uncertainty facing the backward castes may have contributed to the saving convergence between them and other castes.

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