Vol. 2, Issue 5 (2015)
Savings and Investment Behavior of Rural Household in Salem
Author(s): J.Amudha, V. Aravamudhan Varathan
Abstract: Saving is an important macroeconomic variable to be deliberated under the purview of the economic arena on an individual as well as household basis. Countries like India, income standard is almost uncertain and leads to more consumption rather than saving which has now been a fundamental problem. If the saving is low, then the speculation will also be low leading to low capital formation. The present survey analyzes the determinants and patterns of saving behavior in rural household of Salem. The marginal propensity to consume is more rather than the marginal tendency to save. The saving determinants are analyzed empirically by a linear regression method. The income, level of expenditure, consumption pattern and saving behavior is taken as the criteria for depicting the samples. The present study disclose that the rural households varies in terms of the distribution of income and occupation i.e. in other terms, the lowest income groups (the agricultural labors and the non- agricultural labors) have the highest marginal propensity to consume which leads to lowest marginal propensity to save as compared to the other occupational teams. The survey finds that most of the countryside households have low educational status which is resulting in less awareness of the people towards the benefits of saving. They are even hasty towards their health standard as the consumption of local liquor is very prominent in these households which in a way or the other decorating the health as well as the financial condition of these households.