Chief Economic Advisor (CEA) V. Anantha Nageswaran stated on Monday that Indian households are not in distress and are increasingly investing in financial instruments. Speaking at a media conference after the Economic Survey 2024 was presented in Parliament, CEA Nageswaran highlighted the rise in retail investments in the stock market through systematic investment plans over the past four years.
Household savings and investments in physical assets have improved significantly. Households are not in distress; they are investing actively in financial instruments, which have performed well in the last four years. Retail investors have increased their investments in the stock market through systematic investment plans and mutual funds. This is why there is a perception that financial liabilities have grown faster than financial assets. Households are actually doing quite well," Nageswaran explained.
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The Economic Survey noted that households, alongside private corporations, have been pivotal in capital formation. The growth in housing sales in urban areas has been remarkable, showing that urban households are diversifying their savings. In 2023, residential real estate sales reached their highest levels since 2013, with a 33% year-on-year growth and a total of 410,000 units sold in the top eight cities.
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According to real estate research firm Proptiger, new housing supply hit an all-time high with 520,000 units launched in 2023, compared to 430,000 units in 2022. This momentum continued into the first quarter of 2024, with record-breaking sales of 120,000 units, marking a robust 41% year-on-year growth. The survey noted that new supply has consistently exceeded 100,000 units since the second quarter of 2022, highlighting persistent demand-supply dynamics in the housing market.
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Initiatives in the social sector have also led to increased consumption spending, as shown by the latest Household Consumption Expenditure Survey (HCES) for 2022-23. The survey revealed positive findings on inclusive growth over the past decade, with the monthly per capita consumption expenditure (MPCE) rising in real terms in both rural and urban areas compared to 2011-12. The gap between rural and urban MPCE has also narrowed.
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The Economic Survey further highlighted a surge in retail activity in the Indian capital markets through direct trading and mutual funds. The individual investor's share in the equity cash segment turnover reached 35.9% in FY24. The number of demat accounts increased from 114.5 million in FY23 to 151.4 million in FY24. This influx of individual investors has also been reflected in new investor registrations with exchanges, their share in total traded value, net investments, and ownership in listed companies.
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For example, the registered investor base at the National Stock Exchange (NSE) nearly tripled from March 2020 to March 2024, reaching 92 million by the end of March 2024, potentially indicating that 20% of Indian households are now investing their savings in financial markets.
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