1. Increase in Savings Capital formation depends on saving. According to J.M. Keynes “Saving is the excess of income over consumption expenditure”. To be more precise, saving is a part of income that is not spent on current consumption. If consumers spend their entire incomes on consumers’ goods, there could be no accumulation of capital goods. If, on the other hand, consumers decide to save part of their incomes, country’s resources can be devoted to making capital goods.