Page 1 of 14
Journal for Studies in Management and Planning
Available at
http://edupediapublications.org/journals/index.php/JSMaP/
ISSN: 2395-0463
Volume 04 Issue 03
March 2018
Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 115
A Study of Saving and Investment Pattern of Rural People
Soniya, Research Scholar, Haryana School of Business, GJUS&T,Hisar.
Ajay Singh, Research Scholar, Haryana School of Business, GJUS&T,Hisar.
ABSTRACT
Saving is an important decision that affects both present and future consumption. A decision
to spend now or save is really a choice of when to spend –now or in future. If a household
decides to save in present it affects his current spending level. Household investors can play
important role in financial market because they have big share in gross savings of the
country. The aim of this paper is to examine the saving and investment behaviour of rural
people in India. The reason behind choosing this research topic is that near about 70%
population of India lives in rural area .People of villages suppose to be miser, where as
people living in metro cities or cities are more spending. Rural investors are different from
their urban counterparts. This could be because of lack of information, less financially
availability and lack of employment opportunities or sources of earning. Our government,
banking institutions and financial institutions are making plans and programmes to promote
saving and investment habits among rural people. Although many other researches have been
conducted on this topic. Still this will help us to understand the vision of urban and rural
people towards saving habits. A pool of 150 randomly selected samples were used as sample
to examine objectives of this paper .This paper has been conducted to answer few important
questions on preference of the investment instruments and investment pattern of rural people.
Keywords: Investment, Saving, Investment Behaviour, Rural Investor
1.1Introduction
The main aim of this study is to get
information about saving and investment
behaviour of rural households in India.
Saving is an important concept in
determination of economic growth
(Adam Smith, David Recardo and J.S.
Mill, ). The pattern of investing savings is
an important factor in determining how
saved amount is utilized for productive
purposes (shodhganga.inflibnet.ac>11-
chapter 5). We can explain saving and
investment in two senses first is Keynesian
sense: saving is that amount which is left
after consumption of goods and services;
investment is that amount which is spent
on goods and services that are not
consumed but are durable. Second sense is
Monetarist sense: saving is the amount
exceeding expenditures, investment is the
rate at which financial intermediaries and
others use items which are designated to
end up capital that creates
value.(https://en.m.wikibook.org).
According to John Robinson (1956)”By
investment is meant an addition to capital,
such as occurs when a new house is built
or a new factor is built investment means
making an addition to the stock of goods in
existence.”Investors use them for capital
formation.
For the purpose of determining saving
economy is divided in three sectors mainly
Page 2 of 14
Journal for Studies in Management and Planning
Available at
http://edupediapublications.org/journals/index.php/JSMaP/
ISSN: 2395-0463
Volume 04 Issue 03
March 2018
Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 116
Household sector, Private Corporate sector
and public sector (www.gasckkd.ac.in). In
India about 70% of the savings come from
household sector and from which near
about Rs 90 Lac crore are in form of
saving deposit in banks
(www.bankfold3.com). Different people
have different saving habits. According to
NCAER (NSHIE 2004-05) in India
salaried people save the most, agriculturist
people save on an average and labour
dependent category save the least (Ismeet
Singh 2017).
According to (NCAER 2011) 50% Indian
household invest their savings in
commercial banks and insurance schemes.
There are 24.5 million household investors
in India who constitute about 11% of total
household population.
Indian household savings and investment
pattern is changing over the years: Indian
households were risk averse and wanted to
invest in safe assets like gold and real
estate, but now they are becoming risk
takers and changing slowly specially since
demonetization in 2016.(http://www.the
quint.com>news). Mutual fund has been
the highest contributory factor to this trend
of a domestic move towards higher
savings in financial assets. According to
AMFT, 2016..... Net inflows of mutual
fund in 2016-17 have reached Rs.3.43
trillion which is 155% rise from Rs 1.33
trillion in 2015-16. Investment rate for
instance was 31.6% of GDP in 2014 and it
fell 30.59% in 2017 and may be up to 31%
of GDP by 2020.(IMF report,).
According to RBI report 2016-17.There
was a fall in household investment mainly
in household dwellings ,other buildings
and structures, but investment by other
agents, government and private non
financial corporation’s showed increase
.Investment in new plans and corporations
in both in government and private sector
decreased in 2016-17.Consumption
expenditure were low in 2016-17 but
increased after demonetization impact. In
the term of financing, household financial
savings increased from 7.8 percent to 8.1
percent of Gross National Disposable
Income (GNDI), in bank deposits, life
insurance, mutual funds even through
currency with public.
1.2Literature Review
Samudru , Burghate (2012) found in their
study that major part of investors invest
with the aim of getting high return. Basic
reasons behind increased saving habits in
Indian households are structural changes in
Indian economy .Availability of new and
attractive investment options make them
more investment conscious and aware to
invest their savings. The study illustrated
that there is a need for financial literacy of
rural households. Such financial literacy
will help in improving saving and
investment habits of people and capital
market in India.
Pathy (2017) concluded in his study that a
major part of rural population had less
knowledge about investment sources. They
make less investment in industrial security,
insurance, gold etc. But they invest more
in banks and post offices. Most of people
in rural area are involved in agriculture
work and they have less income and weak
economic condition that influences their
saving behaviour. They tend to save for
further livelihood, cultivation purpose, and
social needs or for domestic purposes.
Page 3 of 14
Journal for Studies in Management and Planning
Available at
http://edupediapublications.org/journals/index.php/JSMaP/
ISSN: 2395-0463
Volume 04 Issue 03
March 2018
Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 117
Gasti (2017) concluded in his study that
there are many options available for
investors to invest for their savings in
present financial market scenario but these
investment options concentrated more on
urban areas. Rural investors are not taking
many benefits by investing their savings
due to lack of knowledge to manage their
investment. Rural investors find it difficult
to manage their investment portfolio to
maximize their return and minimize their
risk. Rural investors must be educated
through various awareness schemes
regarding investment schemes.
K J (2015) concluded in his study that
people have different type of behaviour
when they decide to invest in a specific
avenue. With proper financial planning
and investment strategies investors can
increase their wealth and can contribute to
economic development of our country.
Economic development is an important
factor in deciding the quality of life that
people lead in a country. Three variables
income, saving and investment are
determinants of economic growth of a
country. When savings are invested in
productive areas, it enhances the national
product or per capita income and raises
standard of living of people of a country.
Thus, saving and investment by
individuals are important for both personal
financial position and for economic
development.
Lokhanda (2015) explained in his study
rural investors are found less aware and
have less knowledge about investment
avenues and rules and regulations. Our
economy is growing and standard of living
is increasing still level of saving
mobilization is lower in India. Rural
investors are not able to invest properly.
Rural people want to invest in safe options
only like gold and jewellery, bank
deposits, real estate etc. So, every person
in rural area should be motivated and made
aware to invest.
1.3 Objectives of the study
The following are the objectives of the
study
1. To study saving and investment
pattern of rural people.
2. To find the motives behind savings
and investment of rural people.
1.4Research Methodology
This study is done by collecting primary
data from the field. Secondary data is
viewed for more clarity and for getting
knowledge of general background. A
sample was drawn by using non
probability convenience sampling
technique. We selected those persons as
our respondents who are financial decision
makers of a family. Primary data was
collected by using survey method. This
study was conducted with sample 150
households from rural area of Kaithal
District (Haryana).
The table shown below explains
demographic profile of respondents.
Demographic profile is shown with the
help of frequency distribution. A sample of
150 respondents was taken for the study.
Age, gender, education qualification,
family size, occupation, annual income
and marital status of all the respondents
are shown in the table. With the help of
