Determinants and pattern of saving behavior in the rural households of western odisha

Abstract

Saving is an important macroeconomic variable to be studied under the purview of the economic arena on an individual as well as household basis. In a country like India, the income standard is almost uncertain and leads to more consumption rather than saving which has now been a central problem. If the saving is low, then the investment will also be low leading to low capital formation. The present study analyzes the determinants and patterns of saving behaviour in rural household of western Odisha. The determinants and patterns of saving differ from rural to urban region. In rural areas, the marginal propensity to consume is more rather than the marginal propensity to save. The study is conducted through primary survey with 300 households drawing a sample from rural villages of Sundergarh district of Odisha. These 300 households from Sundergarh district are selected and a cross-sectional primary data is collected by personal interview method. The determinants of saving are analyzed empirically by a linear regression method. The income, level of expenditure, consumption pattern and saving behaviour is taken as the criteria for drawing the samples. The present study reveals that the APC and MPC of the rural households varies in terms of the distribution of income and occupation i.e. in other words, the lowest income groups (the agricultural labours and the non- agricultural labours) have the highest marginal propensity to consume which leads to lowest marginal propensity to save as compared to the other occupational groups. The study finds that most of the rural households have low educational status which is resulting in less awareness of the people towards the benefits of saving. They are even careless towards their health standard as the consumption of local liquor is very prominent in these households which in a way or the other detoriating the health as well as the financial condition of these households.