MUMBAI: On paper, India's households have more reason than ever to save. But convincing them that the central bank can keep inflation low is proving difficult, hindering the country's ambitious growth plans.

That raises the stakes for Prime Minister Narendra Modi's government, which wants to channel more savings into investments that can generate both growth and jobs, to boost chances of winning a second term after its landslide victory in 2014.

Real interest rates have been positive for over a year, ending almost a decade of negative rates, during which fast-rising prices ate away at whatever savers earned on deposits, and hardened their preference to hold gold and property. (Agencies)