New Delhi, July 30 -- Indian households have been the backbone of India's savings story, accounting for about 60% of the total, with this money going into investment and economic growth.

Yet, we face a paradox.

Net financial savings form a modest 29.5% of overall household sector savings, with household debt having surged to 41.9% of GDP. While this may be a direct result of rising consumer spending, it puts the 'life-cycle hypothesis' under strain.

Notably, a large chunk of savings is held in assets that cannot easily finance people's post-retirement lives. Household savings are at 21.7% of GDP, but the bulk of it, 13.6% of GDP, goes into physical assets-primarily residential real estate.

This is wealth locked in illiquid assets, an ...