CHAPTER I1

CHAPTER I1

REXIEW OF LITERATURE

This chapter provides a brief resume of the

earlier research efforts relating to income, saving and

investment of households. The reviews are arranged in

chronological order.

A study of Modigliani (1949) on the fluctuations

in the Saving-Income Ratio found that the average saving

rate 'tends to be proportional to per capita income under

conditions of steady growth and the saving rate is

positively associated with the rate of growth of Gross

National Product (GNP). Friedman 1 1 9 5 7 ) exarnlned the

theoretical hypothesis of a marginal propensity to save

equal to unity (appears to be debatable) in the case of

transitory income, however, the results obtaiced seem to

vary considerably according to the definition adopted for

permanent income.

In the opinion of Schultz (1964) the cause of low

savings rate amongst rural households is due to few

investment outlets for potential savers, and one necessarily

due to low income and the small retes of return. Houthakker

(1965) made a study on some determinants of savings in

Developed and Under-Developed countries. He examined that

the number of dependent persons young or old affects the

average propensity to save more than per capita saving. The

proportion of dependents reduces the potential for saving.

Household size has an effect on the savings threshold. In

columbia, the addition of one person in relation to the

average size produces a variation of 2 per cent in

consumption and 10 per cent in savings. The size of the

home does have an effect, with savings declining as the

number of persons increases. When more persons in a

household are working, the motivation is additional saving.

with:regard to the educational factor, it is found that at a

given income level, the propensity to consume increases with

the level of education. Households with a lower level of

education have a relatively high transitory income.

However, education may have more effect on the allocation of

savings t h a n on their level. Shukla (1965) attempted to

assess the Capital Formation in Indian Agriculture by using

the secondary data and found that the dominance of savings

over investment.

Friend Irwin and Taubman (1966) observed that

the propensity to save relates to deferent socio-economic

characteristics of households (education and occupation).

The marginal propensity to save from transitory income is

higher than it is in the case of permanent income (which may

not be far from what it is in relation to current income).

However, the opposite result is found in urban areas of

India. Savings from permanent income are intended for the

accumulation of assets to serve specific functions. Saving

is stable over time and that it depends greatly upon past

savings. 'The possession of physical assets significantly

affects household saving (net or per person). In rural

areas, both in India and in Indonesia, average and

marginal propensities to save increase with the alllourlt of

land possessed. The income level of the agricultural group

being subject to grater fluctuations. The co-efficient of

adaptability to change of income level is negative in the

agricultural group. While it is nil for the non-

agricultural group, which is more easily able to forecast

its future income level correctly.

Lokanathan (1967) concerned with the households

saving surveys, being made in urban areas and in ruial

areas. Contrary to the situation in developed countries,

households that won their homes have a lower saving rate

than those renting their dwellings (but only one third are

in debt). Further, over the age of 65, the saving rate 1s

very high, which is probably linked to the existence of

extended families. Self-employed workers have very high

average and marginal rate of saving because of the equipment

needs and the irregularity of their income. Actually, this

group is heterogeneous and comprises two categories: small

enterprises (20 per cent ) and handicraftmen ( 5 per cent ) .

'I'll- ::I ~i(i). 1 1 1 Choudhury (1968) nl t r~lipred to

examine tilt? household saving by coi~su~nptioll bellavlour i11

India by fitting a set of function for rural and urban

households as well as for all households together. The

study relies on secondary data collected during the period

between 1950- 51 to 1962-63. The major findings of the

study are the rate of household savings has increased

substantially since 1970-71. This increase has mainly been

due t < ) t h r increase i n households savings in financial

assets. l'lle rate of hoi~sei~old savirlgs in physical assets

ticis n o t ci~;lrigcci vei y rnl~cl~ since 1970-71, though there is

some incraas? over the short pe~iod of 1976-79 to 1980-81.

To understand more the saving behaviour of the households,

it is observed from the functional relationships that both

the variables viz . , ( personal disposable Income and

household cavings in financial assets), change

proportionately. It is further observed that the saving

rises faster than income. In the study, four different

functional forms are fitted on the data for the period 1950-

51 to 1962-63. An exmination of the results suggested that

the linear relations present with correct signs. The

statistical measure of R~ also carries the higher value in

this case. At the aggregate level and for urban households,

the logarit-hmic linear relation also gives meaningful

rc?sults wit!i illcome elasticity of saviiig greater than unity

but comparatively lower values of R~ . The marginal rate of

saving is still low. Income elasticity of financial saving

is higher than unity, but substantially smaller than that

of urban households when total household savings are

considered. Clark (1968) observed the population growth

has positive effect on saving and that larger family size

does not reduce the average propensity to save.

Kelly and Wiliamson (1968) studied the influence

of the age of the wage earner on the saving rate. Using an

Indonesian household survey, they tested the hypothesis that

people attempt to spread their life time consumption evenly

over their life tlme by accumulating enough saving during

their earning years to maintain their consumption standard

when earned income will be less durinq the retirement

period.

A study of Subramanian Swamy (1968) on "A Dynamic

Personal Saving Function and it's Long-run Implications",

based on the empirical studies for developing, countries

showed divcrgcnt ~ n i ~ r g i ~ l ~ ~ l 1 1 1 0 p c 1 i u i L i c ~ i L O U I I V ~ (1111 0 1

permanent and transitory income. Two alternative

specifications of the permanent income hypntheses are found

in the studies of saving behaviour, the Asset Adjustment

Approach and the Growth Rate of Income Model. In Asset

accumulation of assets which perform the specific function

for the saver. One assumption is that the desired level of

asset is a direct function of permanent income and that the

desired stock of assets is acquired only over a fairly long

period af time. The saving function is highly dependent upon

past saving behaviour and is fairly stable over time.

Desai (1969) attempted to study on "Level and

Pattern of Investment in Agricultural Households". A cross

sectional analysis is used in a progressive and a backward

area of Central Gujarat. It is observed that the factors

Viz., size of operational holdings, family size, net

household income, extent of commercialisation,extent of

irrigated area and current borrowing are the major

determinants of investment. It is found that the family size

exerted low, insignificant and negative influence on durable

variable which explained the difference in the behaviour of

farmers in the two regions.

Leff (1969) proposed and tested the hypothesis

that the higher the proportion of household members who

consume more than they produce (dependents), the low will be

the household average saving. Using a seventy four country

cross-section sample, it was inferred that the dependency

ratio has a significant negative effect on saving. The study

of Chauhan and Agarwal (1970) on "Magnitude and Pattern of

Form Investment in Rajasthann, used the multiple regression

model of investment and determined the factors influencing

on investment. They found that age of the head of the family

and the number of members in the family exerted influence on

investment.

A study of Gupta (1970) "On Some Determinants of

Rural and Urban Household Saving Behaviour", found that the

marginal Propensity to save is higher in urban sector over

that of the rural sector. Moreover, in both the sectors the

marginal propensity to save tends to increase with per

capita income and a redistribution of income from rural to

urban household will lead to higher aggregate household

saving. Further, it is observed that the urban household

oavir?g out of the permanent inco~n~ in India is higher when

compared to that of the rural sector. On the other hand, the

marginal propensity to save iMPS)out of transitory income of

the rural sector is greats than the marginal propensity to

save IMPS) cut of permanent income, the reverse being true

for the urban sector. Panikar (1970) attempted to study on

Rural Savings in India and found that the propensity to save

of the rural sector is grater than the urban sector.

Gupta (1972) examined the two propositions. The

currency holding by the public locks up real resources. The

real resources so locked up are socially infructuous. THe

social marginal productivity of real resources congealed in

the form of currency is zero or substantially lower than

what it would be in alternative uses and that consequently

their release through saving deposit mobilisation would make

them available for socially productive uses. The suggested

policy implications are (i) Encouragement to a greater

mobilization of savings and (ii) Encouragement to higher

overall monetized and non monetized rate of savings.

Singh (1972) attempted to examine "The

Determinants of Aggregate Savings", and found that there is

a significant correlation between the average rate of saving

and income growing at a steady rate. Moreover, the average

saving rate is related to the rate of growth of Income.

According to Mckinnon (1973), while examining the role of

money and capital in economic development, the capital is

misaliocated in the rural areas due to relative absence of

financial intermediaries.

Peck (1974) examined whether increasing population

and growth rates retard or stimulate household savings using

data from Philippines statistical survey of household, for

1961,1965 and 1971. These data are for 12 income groups and

three geographical areas (Rural, Manila and other urban).

'I'lie quality of the data ~nelitiolied is xaLlie~' y u o ~ . I t is

Inferred that the dependency burden has a negative impact on

the saving rate, which is only to a small extent, offset by

economies of scale in consumption.

Snyder (1974) examined saving attitude of

households with respect to many socio-economic variables.

The tests are mainly related either to large samples over

time involving both developed and developing countries or

different countries of Asia or the Pacific. It is inferred

that the current income is a significant determinant of

household saving. The variability of the average propensity

to save depends upon the relative importance of other

explanatory variables of household behaviour. The marginal

propensity to save which appears to increase along with

income at the lower income levels, seemed to be lower in the

developing countries of Asia than in developed countries. In

addition, it is not always higher than the average

propensity. The marginal propensity to save may be higher in

urban areas than in rural areas. The propensitites to save

vary according to source of income.

Sen (1975) examined the effects of inflation and

analysed the efficacy of index linking in ameliorating the

adverse effects on savings and investment in developing

countries with the help of reviewing the earlier empirical

studies. It is observed that even index-linking has a

positive effects upon savings and investment. There has been

little experimentation with index linking that too aimed at

very specilic and limited objectives in a few developing

countries.

Kelly (1976) tested three equation models used on

households survey of 2436 United States Urban families. A

few inferences are drawn it is observed that the direct

impact of family size on saving is negative. However,this

simultaneous equation model has also specified a number of

indirect effects of family size on savings. The hypothesis

stated that "a portion of the cost of additional children is

financed out of a reduction of consumption by other

household members". Children exert an influence on the level

of household earnings. family size is determined

endogenously with respect to economic factors. Taking thee

indirect effects into account, the impact of family size on

savings is ambiguous depending on the source of the change

in family size.

Subramanian (1977) had found in a study on

consumption, saving and investment of farm households in

coirnbatore that contribution of agriculture to total income

is about 84.6 per cent in developed areas and 48.4 percent

in undeveloped areas. The dis-saving behaviour is observed

among the farm households. Bhalla (1978) examined the

sources of income effect on rural savings based on the

national Council of Applied Economic Research (NCAER) data.

It is observed that the propensity to save out of non-

agricultural income is higher than the propensity to save

out of the agricultural income.

Musgrave (1978) observed that some forms of

savings accumulation are probably under estimated. The great

majority of households has no financial assets not even a

bank account. However, such assets do appear at high income

levels and their frequency depends upon the rates of return

offered. Most of the households has assets of own house or

ill tlle process of purchasing olie. The acquisitioll of assets

depend upon the income level and income generating assets

such as a house, a motor car, a bank account, shares and

others. Only the high-income households exercise a choice

among different assets. If imputed rents are excluded, the

concentration of income from capital is very high in many

LOW-income nouseholds own their homes. The level of saving

increases rapidly when income, which is t h ~ decisive factor

ln saving growth. The proportion of permanent income devoted

to saving increases with income. It is scarcely possible for

households to anticipate their level of real income in the

long term. Because, it is difficult for them to lend or

borrow freely in order to make necessary adjustments between

capacity to save and needs. The rate of saving is relatively

higher among the elder of the households. The behaviour of

the rural households relate mainly to Asia showed that the

amount of land held appeared to have a great effect on

capacity to save. It is observed that there is a significant

increase in the average propensity to save on both large and

small farms size.

Bilsborrow Richard (1979) examined a micro level

study On age distribution and savings rates in less

developed countriesm. It is found that higher population

growth rate associated with a larger family size would

reduce the saving. On the other hand, household size may

interact with income and consumption because a higher family

size might mean a higher level of income through an

increase in the number of earners and economics of scale in

consumption. The small proportion of population which saves I

in developing countries, the partial substitutability of one

source of savings for another and the adaptability of

household to change in dependency as the factors responsible

for this.

I Narayana ( 1 9 7 9 ) attempted to study on Income,

Saving and Investment of Household Sector in Chittor

District during the Period 1973-74. Primary data are use for

the analyses of the study. Stratified sampling method is

adopted for the selection of the sample households. The

total size of sample households is about 1650. Out of which

1200 for rural area and 450 for the urban area. The study

pertains to the middle income groups whose annual income

ranged between Rs. 1,500 to Rs.25,000. It assessed the

impact of the socio-economic factors such as the size of

household, the level of earners, the level of education, age

of the chief earner and the occupation of the households on

income generation, saving formation and investment decisicn.

The study of S h a m (1979) on "Saving behaviour of the

Household S e c t o r n , found that nearly 70 percent of the

households saved positively and there is not much

-3 8 significant difference between the rural and urban

households. Adiseshiah (1980) analysed Savings and

Investment in India with macro perspective during the period

1970-71 and 1979-80. He observed that the savings rate

(16.9%) and investment rate (17.9%) have been increased to

23.5 per cent and 24.8 per cent respectively during the

period. It is also observed that the investment rate exceeds

the saving rate in India due to the inflow and outflow of

capital transf ers . The inequalities in income distribution

has been increased. The proportion of saving is more among

the non-farm sector compared to tile farm sector. The

productive investment becomes profitable investment when

capital utilised with full capacity in a short gestation

period.

A study of Kuznets (1980) on the saving behaviour

of 70 couptries showed that the personal saving is

positively correlated to personal disposable lncome. The

Reports of NCAER (1980) observed that the effect of age on

saving is quite significant, as supported by the fact that

tile observed saving income ratio is small for young groups,

high for middle age groups and again low among older age

groups.

Shetty (1980) reviewed the trends in domestic

saving rate in India during the 1980s. In reviewing the

behaviour of the household saving, it is observed that the

total household saving rate and the saving ratio (gross)

attained peak at 17.0% in 1978-79 and fell to 16.9% In 1988-

89. The rate of gross financial savings rose from 4.7% in

1970-71 to 10.2% in 1988-89. Whereas,the rate of physical

assets formation increased from 8.1% in 1970-71 to 9.8% In

1980-81. The share of household savings (gross) to the

personal disposable income has increased from 13.8 in 1970-

71 to 21.9% in 1987-88. The non farm household income has

grown at a significantly faster rate during the 1980s. The

average compound growth in the non-farm income has been

tnucll t i igi icr than in ill the farm income. The share of

disposable income of non-farm households whose savlng

propensity is much higher than that of the farm households.

All relevant studies on saving suggest that the non-farm

households possessed significantly better saving potential

and saving propensity than farm households.

A study conducted By Sharma (1980) about the

behaviour of household saving in India with a macro

perspective revealed that the household saving has shown

upward trend over the decade 1968-69 to 1977-78 with

fluctuations. Moreover, it is observed that the shares and

securities command more liquidity as compared to physical

assets. Saving in the form of provident funds could be made

more attractive by enhancing the rate of return. The fixed

savings in the form of provident funds and insurance

policies are the progressive erosion in the value of rupee.

Wolf (1982) examined the Modigliani - Bermberg

(M-B) model as an explanation of variation of wealth

holdings among households. In the model the estimates of

households lifetime earnings explain only a minute portion

of the variation in households wealth. Among certain groups

such as non-white, rural residents, and the low educated the

coefficients of the regression model are insignificant.

Moreover, the top wealth holders are removed from the sample

and non-cash financial and business assets are eliminated

from the household portfolios, the explanatory power of the

M-B model increased markedly. Essentially, the validity of

life-cycle wealth accumulation model must be restricted to

white, urbar:, educated middle classes and their accumulation

of housing, durables and cash. The rich people has very

different motives for saving and very different sources of

saving. Whezeas, the poor do not earn sufficient income over

their lifetime to accumulate the non-negligible wealth.

Sharan (1984) attempted to examine the savings in

Rural India: An Analysis of Major Determinants tested the

poor performance of savings by analysing the attitudes,

demographic consideration and interest rate and prices,

based on reviewing the various earlier studies. The analysis

of the major determinants of rural saving made it clear that

some of the factors influenced it in a positive direction,

while the others pulled it into a negative zone. There is an

aptitude to save among the rural people either because they

are more oriented to wealth accumulation or they preferred

to abstain from luxurious sophisticated consumption,

conscious of their old age requirements. But in food prices

and emergence of transitory income in some cases facilitated

lie savings. But, the low level of education and high

dependency ratio arrested any growth in savings. So any

attempt to raise rural savings on these lines would be a

successful venture.

Ashok Kumar' and Jagadeswara Rao (1985) examined

~ ! i e applicability of Goale-hoover-Enke-Demeny hypothesis

i l l ich states that higher family size would mean a reduction

In saving to Indian saving behaviour. They also assessed the

lmpact of age distribution and household size on household

naving behaviour in India and examined the urban-rural

differences in the effect of demographic variables on

I!ousehold saving behaviour in India. The sample households

include 3015 rural households chosen form 237 villages and

2110 urban households from150 cities/towns in India. The

x3;or findings of the study are. There is an inverse

relationship between the level of household saving and

1'2eel.old size In both rural and urban as well as all Indla

-uvld~ng evldence In support of Coale-Hoover-Enke-Demeny

l ~thesls whlch states that hlgher rates of population

i l y d t h would exert negatlve Influence on savlng rates and

thereby on economic growth. It is observed that the higher

the proportion of non-earning dependents, the low will be

the household average saving showing an inverse relationship

between these two variables.

The results indicate the differential effect of

household size on the households saving across different age

group in rural India. But, this is not true in the case of

urban India. Among different age groups, middle 1 3 0 - 5 9

years) age group of households exhibited differential

hchavioi~r form those of young (below 30 y w r r . and old (60

and above vears) age groups of the households. There are

differences b~tween the rural and urban ar.Pas regarding the

effect of demographic variables on household saving

behaviour. The level of income is one of the major

determinants of savings. Raising the real income over the

several decades lead to a considerable increase in the

saving ratio. Tne inequality of income exists due to the

Inequality of wealth.

According to Granousky (1986) in his paper Saving

and Economic Growth in India drew certain findings. The

factors such as top income brackets in the household sector

1s also one of the vital factors to accelerate the growth of

savings in India. The savings also played a major role in

financial intermediaries. One of the major characteristics

of househbld saving behaviour is he change in the

composition of structure of savings in terms of physical and

financial assets. The higher income group of non-cultivator

households invested on non-farm activities. The financial

intermediaries became important to mobilize financial

savings of the upper income brackets of rural households.

The share of small and marginal land owner's saving and

investment have increased because of the increase their

share of land ownership which is mainly consequence of sub-

divisions of larger farms due to demographic pressure and

other social conditions.

A study of R.Rajkumar (1986) on household savings,

determinants, and motivations, observed that the households

fact continuing decline in the value of money caused by

inflation. Therefore, the households realising that making

of investment on consumer durables and other kinds of

physical assets like agricultural lands, urban sites, houses

and jewelry is more worthwhile than holding the savings in

financial forms. This is so because " it is primarily the

rate of change of commodity prices that wealth holders

compare with xiomir~al rates of interest on f inancia1 assets.

The households are deciding to save their money in the form

of physical goods". It is also found that the salaried group

of the households saves more in the form of contractual

financial savings such as life insurance and provident

funds.

Another study attempted by Joshil (1988) examined

tlle saving bel~aviour ill India for the period between 1950-51

n ~ l t l 1978-71. nnnr 'd nu 1-Ire n e r o ~ ~ r i ; l r y d a t a nvpr t 1 1 ~ per iod of

3 0 years, the author drew some observations. Over the study

periods, the share of financial assets in total domestic

saving increased sharply from 12.8% in 1950-51 to 52% in

1978-79. On the other harid, the share of physical assets

declined steeply from 87.2% to 48%. The ratio of financial

assets to income has rise from less than 1.5 per cent ln

1950-51 to 8.3 per cent in 1978-79 which reflects the

impressive growth in financial assets. During the period,

the combined share of currency and bank deposits in total

net financial assets rose rather from 11% to 35%.

Conversely, the share of contractual saving in the form of

life insurance and provident funds increased at a lower rate

from 8% to 16% during the same period (i.e. 1950-51 to

1978-79).

Subramanian (1989) examined the income, saving and

investment of farm households in Pondicherry region. The

study mainly relied on primary data collected durlng the

period between 1983-86 from a sample 500 farm households of

20 revenue villages using the multistage random sampling

method. The sample farm households are stratified into four

groups namely marginal, small, medium and large farm

households. Conventional tabular, average and percentage,

Gini ratio, Lorenz curve, Correlation analysis are used to

test the formulated hypotheses. The objectives of the study

a1 r. t r ) ;tnnr!in I l l c p a r t P T I I (1f i l ~ r . o ~ l l r , n i l v i l i ~ j illid i ilvrX!it I I I P I ~ ~ o f

farm households to identify the determinants of farm

investments and savings and to evaluate the saving and

investment propensities of the farm households. It is

observed that there is an inverse relationship between the

farm size and income per hectare. Farm investment is

influenced by farm size and income. Saving-income ratio is

positively related to farm size. Investment in modern assets

dominate the farm investment pattern.

Bhatty, Natarajan and Malvea (1991) examined about

the distribution of households by Socio-Economic

Characteristic in 1986. The households are broadly

classified into three income groups 1) low income group

(Rs11,000), 2 ) Lower middle income groups (Rs, 11,001- Rs

22,000) . and 3 ) Middle and high income groups (aove Rs.

22,000). It is inferred that the proportion of households in

the lowest income class at the All India level has been

declining. The proportion of households in the lowest income

class is considerably lower in urban than in rural areas.

The NCAER (1993) study on mobilisation of

household savings for housing is based on a larger-scale

household survey of households spread over 40 sample towns

from 13 major states of India. The study focuses on the

following aspects (i) the zonal/regional differences in

i v ~ liq heliaviour. ( i i i the housinq-link~d savinq l~~l~aviour

I L J ~ d~fferent groups by lncome and tenurlal status and (111)

a separate detailed account of the behavlour of

slum/permanent jewelers with respect to savings linked with

ilousrng. The hypothesis states that the income wealth earner

rdtlo influences the financial savlngs of the households

positively. A general version of the model can be presented

P s i . BO t B l H I i t B 2 WLi + B3 H S i t B4 ERi t B5 P S l i t

B 6 P S 2 i . t B7 S W 2 i ~ t B9 PTRi t B10 GRi t Ei

;':.e notations are

H I i = Annual household income (Rs.)

WLi = Wealth (Rs.)

H S i = Household size

ERi = Earner - ratio (the proportion of eanrrs to llousehold size

P S l i & P S 2 i = Planned for housing

S W l i & SW2i = Sewer system

PTRi = Public transport

GRi = growth of urban population, the dummy variables

Ei = OCl,OC2,OC3 h OC4 = Occupations; Salary earner, Wage earner, Self-employed (business) and self employed (professional) respectively. The groups left out is the Other category.

It is found that the income and wealth influence

zusltively the household savings. Anlong the savings of -..the

Li~c occupdliul~:~ uF Llie Iiuusehul~ln, Ll~e fialaried mid business

households made a positive effect on financial savings. But,

the wage earner had a negative influence on financial

savings of the households in the urban households. made a

negative impact on household finarlcial savings. The low

income group and the middle income group together accoun~ed

for 6 2 . 7 3 % of households who hold 6 9 . 4 4 % of the total

financial savings. The top income groups Viz., upper middle

and high income groups account for 8 . 1 3 % of the total

households having 2 6 . 4 8 % of the financial savings. In terms

of occupatlon,the largest concentration of households is in

the group of salary earners ( 5 2 . 6 % ) and Self-employed

business ( 2 1 . 2 2 % ) . Their corresponding share in financial

savings is 6 2 . 2 % and 2 0 . 9 % respectively. These two groups

accounted for 8 3 . 1 % of the financial savings. In teams of

educational status, 7 0 . 0 % of the total financial savings

come under the two groups those headed by people (i) having

education up to high school and (ii) having education up to

college level. The households headed by persons with above

college level education constituted only 1 0 . 6 7 % of the

households and they possess 1 8 . 8 % of the financial savings.

The motivation among the three categories- those with head

having high school education, college and above college

education is stronger than among the rest of the groups.

Anartya Sen (1993) examined the concept of

development and the way out in the modern context. He has

r . 1 i t I < , , I I 1 y v inwrt l t t ~ ~ f 11r:iliq t I ~ P Ila~ r?(I-Dolnar model with an

assunred capital-output ratio, s i n g e r argues t l i , l t a country

with 6% savings and a population growth rate of 1.25% will

be a stationary economy. While Ghana has managed an

investment and savings ratio of just below 6% (5% to be

exact, it has had a populatio~i growth between 2.4 and 3%

during these decades as opposed to singer assumption of

1.25%. Rather than being stationary Ghana has accordingly

slipped back, going down at about 1% a year.

Further, for three of the low-income countries,

namely China, Bangladesh and Afghanisthan, the Gross Net

Product (GNP) growth figures are not given in World

Development Report (WDR) and they have been approximately

identified with Gross Domestic Product (GDP) growth. The

fourteen low-incorne countries vary in terms of growth rate

of GNP per capita during 1960-80 from minus 0 . 7 % In Uganda

1.3% in Bangladesh and 1.4% in India to 3.7% in China. The

top three countries in terms of economic growth are China's

( 3 . 7 % ) , Pakistan 2.8" and SriLarlka 2.4%. Note that China's

pre-eminent position would be unaffected even if the

approximated growth figure is substantially cut. In the

middle-income group, the gr0wt.h performance again varies a

great deal, ranging from minus 1.0% for Ghana to 8.6% for

Romania. The top three countries in terms of economic

growth are Romania 8.65, South Korea 7 % , Yugoslavia 5.41, of

the three top growth-performers, two also have the highest

share of growth domestic investment in GDP, namely SriLanka

with 36% and China with 3 1 % , Pakistan comes lower, though it

does fall in the top half of the class of fourteen

countries.

He viewed that the traditional development

economics has not been particularly unsuccessful in

identifying the factors that lead to economic growth in

developing countries. In the field of causation of growth,

there is much life left in traditional analysis.

The traditional development economics has bee less

successful in characterising economic development, which

involves expansion of people's capabilities. For this,

economic growth is only a means and often not a very

efficient means either. Further, supplementing data on GNP

per capita by income distributional information is quite

inadequate to mee: the challange of development analysis.

REFERENCE

1. Adiseeiah Malcorn, 9. (1980) , 'Saving and Investment. An analysis", Eautern Econamiet, pp.1222-23.

2 . Amartya Sen, (19931, "Development: which way Nown. The Economic Journal, Great Britain, pp. 748-762.

j. Aehok Kumar, P. and Jagadeewara Rao, M. (19851, "Demorgraphic Change and Household Saving Behaviour in India", Indian Journal of Economicr, Vo1.66, No.260. pp.97-111.

.. Bhalla Surjit, S. (1978), "The Role of Sources of Income and Investment Opportunities in Rural Savings", Journal of Development Economics, (5), pp.259-281.

5 . Bhalla Surjit, 9 . (1979), "Measurement Errors and the Permanent Income Hypothesis, Evidence from Rural India", American Economic Review, Vo1.69, No.3 pp.295-307.

6. Bhatty, I.Z., Natarajan, Is and Malven, S.V. (19911, "Distribution of Households by Socio-Economic Characteristics", Margin, pp.224-235.

7. Bilsborrow Richard, E. (1979), "Age Distribution and Saving Rates in Less Developed Countries", Economic Development and Cultural Change, pp.66:-74.

8. Chauhan, K.K.S. and Agarwal, N.L. (19701, "Magnitude and Pattern of Farm Investments in Sri Ganganagar District of Rajasthan", Agricultural Situation in India, Vo1.25, N0.2, pp.513-514.

3. Choudhury, U.D.R. (1968), "Household Savlng in Financial Assets in Relation to Personal Disposable Income in India", The Review of income and wealth, pp.35-39.

1C. Clark, Colin, (19681, Population Growth and Land Use, Macmillan, London.

1:. Desai, B.M. (1969), "Level and Pattern of Investment in Agriculture, A Micro Cross Section Analysis of a Propective and Backward Area in Central Gujaratu, Indian Journal of Agricultural Economicr, 24 (4) pp.70-79.

1 2 , Friedman Milton, (1957), A Theory of the Consumption Function, Princeton University Press, New Jersey.

1 3 . Friend Irwin and Taubman, P. (19661, I' The aggregate propensity to save. Some concepts and their application to international data", Review of Economics and statistic., Vol. XLVIII. No.2 pp. 113-123.

1 4 . Gupta, K.L (19701, "On Some Determinants of Rural and Urban Household Saving Behaviour", Economic Record, 46, Dec.1970, and "Persodal Saving in Developing Nations; Further Evidence", Economic Record, 46, pp. 243-49.

15. Gupta, K.L (1974), A Model of household saving behaviour with an application to the Indian economy", Journal of Development Studies, Vol, No.1 , pp.91-97.

16. Gupta Suraj, (19721, "Currency Xolding, Mobilisation of Saving and Dangers of Inflationary Spending", Economic and Political Weekly, Vo1.7, pp.1877-1882.

1 7 . Granousky, A. E. (1988) ,"Saving and Economic Growth in India", Margin, pp.74-77.

1 8 . HouthaWter, H.S. (19651, "On some Determinants of Saving in Developed and Under-Developed Countries", in E. A. G. Robinson, ed., Problems in Economic Development, Macmillan, New York.

19. Johnson, D.W. and Chie John, S.Y. (19681, "The saving lncome relation is under developed countries1', Economic Journal, Vol.78, No.310, pp. 321-333.

20. Joshil Kiran, M. (19881, "Inflation, Consumption and Savings Behaviour in India", Margin, pp.158-162.

2:. Kelley, A.C. and Williamson, J.G. (19681, "Household Saving Behaviour in the Developing Economics; The Indonesian Case", Economic Development and Cultural Change, p .16 .

2 2 . Kuzents Simon, (19801, "Quantitative aspects of Economic Growth of Nations, V : Capital Formation Proportions; International Comparisions for Recent Years", Economic Development and Cultural Change, VI, pp.3-21.

2 3 . Leff Nathaniel, H. (19691, "Dependency Rates and Savings Ratest1, American Economic Review, Vol.LIX.No.54 pp.886- 96.

2. Lokanathan, P.S. (19671, "Patterns of Income Distribution and Saving", Occasional Paper No.21 National Council of Applied Economic Research,New Delhi.

2 5 . Mckinnon Ronald, I. (1946), Money and Capital in Economic ~evelopmmt, Brookings Institution, Washington.

26. Modigliani, (1949), "Fluctuation in the Saving-Income Ratio a Problem in Economic Forecasting", National Bureau of Economic Research, Studies in Income and Wealth, Vol-11, New York.

2 7 . Musgrove Philip, (19781, Consumer Behaviour in Latin America1 Income and 8pendings of Urban Familie. in Ten An Dean Ci tie#. An ECIEL Study, The Brooking Institution, Washington.

28. Musgrove Philip, (1979), "Permanent Household Income and Consumption in Urban South American", American Economic Review, Vol, 69, No.3, pp.355-368.

29. Narayanan, D.L. (1979) , Income, Saving and Invretment of Household Sector in Chitoor District, S.Chand & Company Limited, New Delhi.

3 0 . Panikar, P.Q.K. (1970), Rural Saving in India, Somaiya Pub. Co., Bombay, pp.163-64.

31. Rajkumar R. (1986) , "Household Saving; Patterns Determinants and Motivations", Ph.D., Thesis, University of Madras.

3 2 . Ramanathan, R. (1969) , "An econometric Exploration of Indian Saving behaviour" , Journal of the American statistical Associations, Vo1.64, No.325, pp.90-101.

2 2 . Schultz Theodre, W . (1964) , Transforming Traditional Agriculture, Yale University Press, New Haven.

34. Sen Pronob, (1975),"Effect of Indexation on Savings in Developing Countries", Economic and Political Weekly, Vol.10, pp.M.53-59.

35. Sharma, I.R.K. (1979), "Saving Behaviour of the Household Sector", Margin 12:1, pp.50-57.

3 6 . Shama, K.S. (1980), "Behaviour of Household Saving", Eastern Economist, Feb.1980, pp.241-42.

2 1 . Sharan Vyuotakesh, (1984), "Saving ill Rural India. An Analysis of Major DeterminantB1', pp.47-53.

3 8 . Shetty, S,L, (1990), "Saving Behaviour in India in the 1980s Some Lessons", Economic and Political Weekly, March 17, pp.555-560.

39. Singh, S.K. (1971), The Determinants of Aggregate Savi ngs,Domestic Finance Division, World Bank, Washington.

40. Singh, S.K. (1972), "The Determinants of Aggregate Savingu, Econamic Working Paper, No.127, World Bank.

41. Snyder Donald, W . (19741, "Econometric Studies of Households Saving Behaviour in Developing Countries a Saving", Journal of Development Studies, Vol.10, Np.2 pp.139-153.

42. Subramanian Swamy, (1968) , "A Dynamic, Personal Savings Functions and its Long-Run Implications1', Review of Economic and Statistics, Vol.L.No.1 pp.111-116.

4 3 Subremainan, S. (1989), "Income, Saving and Investment of Farm Households in Pondicherry Region", Ph.D Thesis.

44. Subramanian, S.R. (1977) , "Report on Consumption, Savings and Investment Pattern of Form Families in Coimbatore District", TamilNadu Agricultural University.

4 5 . Sukla Tara, (1965), Capital Formation in Indian Agriculture, Vora & Company, Bombay.

1 6 . Williamson, J.G. (19691, "Income Growth and Saving", The Philippines Economic Journal, Vo1.8 No.1.

47. Wolff Edward, N. (1982), "The accumulation of Households Wealth Over the Life-Cycle, A micro-data Analysis", Review of Income and Wealth, Series 27-28, pp.75-95.