RBI Says Overall Financial Resource Balance Of Economy Moderated During 2018-19

The Reserve Bank of India released the July 2020 issue of its monthly Bulletin. The bank noted that the overall financial resource balance of the economy moderated during 2018-19 primarily due to increase in net borrowing of non-financial corporations and moderation in household savings. As per the preliminary estimates, the marginal surplus in the overall financial resource balance turned into a deficit in 2019-20 on account of the widening resource deficits of general government and public non-financial corporations.

The balance sheet of depository corporations continued to remain in contraction mode during 2018-19, reflecting shift in the preferences away from deposits towards other competing financial instruments such as mutual funds and insurance. Liabilities of general government remained at an elevated level during 2018-19 and its financial net worth remained in negative territory. India remained a net borrower from the rest of the world. Loans and borrowing are the most used financial instruments to incur liabilities with a share of 29% in total financial transactions, followed by debt securities and deposits with a share of 20.9% and 18%, respectively.

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