According to a recent article published in the Reserve Bank of India’s (RBI) July Bulletin, savings in India continue to be predominantly favored through deposits for Indian households. However, market-based financial instruments are steadily gaining traction.

The article, authored by Anupam Prakash, Suraj S, Ishu Thakur, and Mousumi Priyadarshini from the RBI’s Department of Economic and Policy Research, delves into the quarterly financial balance sheets of households and their net financial wealth spanning from 2011-12 to 2022-23.

Pandemic Impact on Wealth Accumulation

The Covid-19 pandemic led to a surge in financial asset accumulation and net financial wealth during 2020-21. Mobility restrictions and reduced spending contributed to this trend. As normalcy returned, household consumption increased, resulting in a gradual normalization of net financial wealth. By the end of March 2023, households’ financial assets stood at 135.0 per cent of GDP, while their financial liabilities were 37.8 per cent of GDP.

savings in India
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Consequently, their net financial wealth reached 97.2 per cent of GDP.

The pandemic-induced spike in financial assets led to a remarkable 12.6 percentage point increase in net financial wealth between end-March 2020 and end-March 2023. Listed equity wealth peaked at 19.4 per cent of GDP by end-December 2021 but later moderated to 14.9 per cent of GDP by end-March 2023.

Notably, the article focuses on listed equity holdings due to the absence of estimates for unlisted equity investments. Despite increased leverage, Indian households’ debt-to-financial assets ratio remained stable over time.

Non-Financial Assets and Wealth Composition

The authors highlight that a significant portion of wealth in India is held in non-financial assets, such as housing. However, this aspect was not covered in the article.

The RBI clarifies that the views expressed in the article belong to the authors and do not necessarily represent the official stance of the central bank. This comprehensive analysis provides valuable insights into household financial trends over more than a decade.

While deposits continue to dominate the savings landscape, Indian households are increasingly exploring market-based options. The data presented in this report sheds light on the evolving financial behavior and wealth accumulation patterns in the country.

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