Financial assets of Indian households at 135% of GDP

Listed equity wealth of households peaks at 19.4% of GDP

MUMBAI: The financial assets of Indian households have grown to 135 per cent of the country’s GDP as of end-March, 2023, reveals a study conducted by Anupam Prakash, Suraj S, Ishu Thakur and Mousumi Priyadarshini, all RBI  officials.

Interestingly, their financial liabilities were just 37.8 per cent of GDP; accordingly, their net financial wealth was placed at 97.2 per cent of GDP, finds the report – ‘Estimating the Financial Wealth of Indian Households’. .

The article presents an endeavour to compile quarterly estimates of financial wealth of Indian households for the period June 2011 to March 2023 while also incorporating household investments in listed equity accounting for asset price appreciation.

Other highlights

The spike in financial assets during the Covid-19 pandemic led to an increase of 12.6 percentage points in net financial wealth between end-March 2020 and end-March 2023.

According to the report, the listed equity wealth of households rose to a peak of 19.4 per cent of GDP as at end-Dec 2021, but subsequently moderated to 14.9 per cent of GDP as at end-March 2023.

The listed equity wealth of households is a measure of how much wealth households have tied up in the stock market through ownership of publicly traded shares.

“While the households have leveraged up, their debt to financial assets ratio has remained stable,” the report further said.

It may be pertinent to note that a significant proportion of wealth in India is held in terms of non-financial assets such as housing, which are not covered in this article.