 "The collective wealth of the wealthiest people in India has surged past the $1 trillion mark, reaching a staggering $1.19 trillion (Rs 99.86 trillion), a report by Fortune India revealed on Monday.")
Illustration: Ajay Mohanty
The net financial wealth of households has reached an all-time high of 115.9 per cent of India’s gross domestic product (GDP) in the quarter ended June 2024 (Q1FY25), said Motilal Oswal in a research report on Friday.
Households’ gross financial assets have grown at a fast pace since the pandemic while household debt has remained consistent with the pre-pandemic period.
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According to the report, household gross financial assets reached a peak of 157.9 per cent of GDP in Q1FY25, surpassing the previous high of 152.9 per cent recorded in Q4FY21. Prior to the pandemic, household financial assets were 123 per cent of GDP.
Meanwhile, household financial liabilities remained stable at 42 per cent of GDP in Q1FY25.
The research report shows household debt stood at Rs 127 trillion in Q1FY25 from Rs 106 trillion in Q4FY23.
Debt was 35 per cent of GDP in the pre-pandemic quarters.
Household financial assets include currency, deposits, equity and investment funds, insurance funds, and pension funds.
“Interestingly, the share of equity and investment funds has surged, while the shares have been declining for other asset classes such as currency, deposits, and insurance,” the report stated.
According to the report, equity and investment funds, which include investment in listed equity and mutual funds, account for the highest share in household financial assets after deposits. The share of equity and investment funds is estimated to have risen to 28 per cent of household gross financial assets in Q1FY25, marking the highest level on record and more than double of what it was about a decade ago, the report said.
“The surge in the equity market in recent years has been truly impressive. It is vital to note that while its share in household gross financial assets is at an all-time high, the share of the household sector in India’s equity market has been very range-bound, oscillating between 18 per cent and 22 per cent since FY16, with a 21.5 per cent share in Q1FY25,” the report stated.
Meanwhile, deposits, including small savings, accounted for 38 per cent of household gross financial assets in Q1FY25, declining from about 50 per cent between FY10 and FY14. Similarly, the share of currency declined to just 7 per cent, marginally higher than its share in the period immediately post-demonetisation. Additionally, the share of insurance funds is also down to a 17-year low of 13.4 per cent in Q1FY25.
The pension and provident funds have experienced an increase in their share over the past few years. Their share exceeded 10 per cent for the first time in FY20 from 7.5-8.5 per cent between FY07 and FY15, and has remained at that level since then.
First Published: Sep 27 2024 | 7:21 PM IST
