A revised methodology adopted by the Securities and Exchange Board of India for calculating household savings through securities markets has increased India’s gross savings-to-GDP ratio for FY25 to 34.94 per cent from 34.47 per cent estimated under the previous method.
Household savings through securities markets stood at ₹6.91 lakh crore in FY25 under the revised methodology, compared with ₹5.43 lakh crore under the earlier framework, according to a SEBI research paper prepared in consultation with the Reserve Bank of India and the Ministry of Statistics and Programme Implementation.
Methodology gaps
The paper, authored by officials from the regulator’s Department of Economic and Policy Analysis (DEPA), said the earlier methodology relied partly on estimates and did not fully capture investments through secondary markets, preferential allotments, private debt placements, REITs, InvITs and other market-linked instruments.
“Under the revised methodology, the household savings-to-GDP ratio for FY25 is 21.7 per cent compared to 21.23 per cent under the previous methodology. Similarly, net household financial savings improved to 7.10 per cent of GDP, up from the former estimate of 6.63 per cent,” the paper said.
Revised framework
The revised framework uses transaction-level data sourced from stock exchanges, depositories and the Association of Mutual Funds in India to provide a more comprehensive estimate of household financial savings.
Earlier, 35 per cent of public and rights equity issuances and 40 per cent of public corporate debt issuances were broadly treated as household savings. Secondary market investments and several newer instruments were excluded from the calculations.
The paper said that rising retail participation in financial markets, especially after the pandemic, made a revision necessary.
Households were net sellers of direct equity to the tune of ₹54,786 crore in FY25, and ₹69,329 crore the year before, even as they were record buyers of mutual funds. “This is maturation. The Indian retail investor is booking gains on direct stockholdings and outsourcing fresh allocation to professional vehicles,” said Jimeet Modi, Founder and CEO, SAMCO Group. Of the ₹6.91 lakh crore households put into securities markets in FY’25, roughly four-fifths flowed through the MFs.
Primary market flows accounted for ₹6.32 lakh crore of household savings through securities markets in FY25, led by mutual fund investments of ₹5.13 lakh crore. Overall household savings through securities markets rose from ₹2.6 lakh crore in FY23 to ₹6.9 lakh crore in FY25.
“Actual data provides superior value and factual picture,” the paper said, adding that the revised methodology better captures the shift in household savings from physical assets such as gold and real estate towards financial instruments.