This article studies the evolution of the private saving rate in India during 1960–95. Its
distinctive feature is that it proposes three new measures of private saving, which are
incremental improvements to the (naive) national accounts measure. The improvements
consist of accounting for capital losses to private net worth due to inflation, including
expenditures on durable goods as a form of saving, and expanding the definition of
saving to include human capital expenditures. After examining descriptive trends and
reviewing the related literature, the article tests the hypothesis that households that save
in India “pierce the corporate veil.” The evidence shows that, in fact, changes in corporate
saving are offset by changes in household saving, indicating that the unit of analysis
should be aggregate private saving. The core analytical section of the article studies how
the behavior of the private saving rate is related to the real interest rate, per capita
income, the dependency ratio, financial depth, the government saving rate, and the share
of agriculture in gross domestic product. The empirical analysis is done by estimating
error-correction models on aggregate annual data, although most of the discussion centers
on long-run effects.