A detailed investigation into the sources of domestic saving and its uses by various sectors can provide us with a more complete insight into behaviour with respect to saving, portfolio selection, and the pattern of financial interrelationship among sectors. The saving(s) of each sector is defined as the excess of its income (y) over its expenditure on current consumption (c), i.e., s = y—c. Saving (dissaving) by a sector is equivalent to increase (decrease) in the net worth (NW) of that sector over the previous year. A sector that saves must either acquire financial assets, i.e., money and other financial claims, reduce financial liabilities or acquire real assets. In formal terms, s = A net worth = A (financial assets — financial liabilities) + A real assets1 . It is quite clear that saving may be reflected in a change of net financial assets or in a change in real asset; a change in net holdings of financial assets may indicate either saving or a change in holdings of real assets. It is even possible, albeit unusual, that an increase in the level of financial-asset acquisition is associated with a negative saving (y /. c) by a sector. However, while it dose not measure the level of saving by a sector, the net acquisition of financial assets does reflect the extent of transfer of resources (both stock and flow) by the sector to other sectors.