Imagine 57% of India’s gross domestic product.
Or the vastness of Rs 135 lakh crore1 of financial assets.
That’s where India’s investment solutions — or managed investments — industry2 surged to last fiscal.
Just five fiscals back, the industry’s assets totted up to ~41% of GDP.
What gives?
In two words, increasing financialisation — of household savings.
Financialisation describes a move away from investments in traditional, ‘physical’ asset classes such as real estate and gold towards financial assets.
And we are only getting started.
Household savings comprised over two-thirds of India’s total gross savings in recent years, except for the pandemic ‘outlier’ year (fiscal 2021) when this proportion shot up to 78.5%, touching Rs 43.9 lakh crore. Directed efforts at financial inclusion, digitalisation, a longerterm trend of rising middle-class disposable incomes, and government incentives on these instruments, have better channelled these savings to the industry. With rising inflation, households too, are seeking higher returns beyond fixed deposits.
1 Includes assets under management (AUM) of mutual funds, life insurance, National Pension System (NPS), provident funds (PF), portfolio management services (excluding PF and advisory assets) and commitments raised by alternative investment funds (AIFs), retirement fund assets as per CRISIL MI&A Research estimates
2 Includes life insurance, mutual funds, retirement funds (pension funds including NPS, and PF), AIFs and portfolio management services (PMS; excluding PF assets excluding PF and advisory assets)
