How Indians Save

(Last Updated On: September 5, 2016)

Definition Savings

Personal Savings : Whatever you earn you can either  consume all or chose to not , part of your earnings you chose not to consume is called Personal Savings, you can chose to keep your savings in bank account or invest it in Real estate, bonds,shares, Mutual funds or other financial instruments

National Savings : National savings is the sum of personal savings and  the corporate savings, which is the profits which corporates do not distribute.

Indian household savings have been constantly increasing since independence, and have stabilized in last few years to around 30 % of the GDP .


India savings


See the Graph below  savings rates for India has constantly been increasing  savings as percentage of GDP, expect for last couple of years, which shows multiple things, tapering of saving potential,advent of consumerism etc


Savings percentage of GDP


The next important question to answer is  where do Indians Invest their savings, while traditionally Indians have invested most of there savings in physical assets like Real estate, gold but over years this is changing , with government building up strong regulations in Equity and Mutual fund market, and providing great protection to investors, more and more people are diversifying away from traditional instruments and investing in Mutual funds, stocks , bonds and other non-physical assets

With distribution network expanding for different financial instruments penetration is going to improve and hence Indian’s will keep on moving away from Physical assets

Karvy has done an analysis on individual wealth by breaking private wealth in different asset classes , this doe snot include government and Institutional investors

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Indias savings split
Investments in Non-Physical assets


Indias Savings-1

Basically the date above shows  that Indians are investing very less in mutual funds and still investing lot in physical assets and cash equivalents, as economy matures this is one trend which should change,government of India is also trying to make investments more broad base so that larger number of retail investors  participate in capital markets, as a result regulations around mutual funds have been stream lined to provide adequae protection to retail investors, also barriers on mutual fund distribution are being reduced to ensure greater access for retail investors.




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