Connectivity and Savings Propensity among Odisha Tribals

Abstract

Tribal areas are some of the poorest regions of India. An increase in local savings is an important tool in fostering sustainable growth in these areas. This paper uses the results of a survey to examine the factors affecting saving in a rural part of Odisha state populated primarily by tribals. We find that an important determinant of savings propensity is connectivity, which we interpret as a measure of the extent to which individuals feel connected to the broader economy, and an indication of their economic optimism. This interpretation is buttressed by the relationship between savings propensity and variables such as food consumption patterns and asset ownership that may also reflect attitudinal factors. One implication of these findings is that connecting rural areas to other, possibly urban, locations could elicit greater savings and thus lead to greater income growth. By relating savings behavior to new sociological population characteristics, such as perceived connectivity and food consumption patterns, this paper provides hitherto unexplored clues for policy initiatives to increase savings.