NEW DELHI: Economic Survey that cautioned against the risks of excessive financialisation said India ranked first globally in the number of IPO listings in FY24, underscoring the rapid expansion of its equity markets.
The Economic Survey 2024-25, released on Friday, highlighted this surge in capital market activity but also cautioned against the risks of excessive financialisation, where financial markets disproportionately shape policy and economic outcomes.
The survey noted that financialisation has led to unsustainable levels of public and private sector debt in advanced economies, making economic growth overly dependent on rising asset prices. \
It warned that India must strike a balance between financial sector expansion and long-term economic stability as it pursues its Viksit Bharat 2047 vision.
Shifting credit trends
The financial sector is undergoing a transformation, with consumer credit playing a bigger role in overall bank lending. The share of consumer credit in total bank credit jumped from 18.3 per cent in FY14 to 32.4 per cent in FY24.
Meanwhile, non-bank financing has gained traction, with the share of banks in total credit falling from 77 per cent in FY11 to 58 per cent in FY22, as NBFCs and bond markets took on a larger role.
Strong banking sector
Despite global uncertainties, India’s banking sector remains strong, the survey said. Liquidity, represented by the net position under the Liquidity Adjustment Facility, was in surplus during October-November 2024.
The gap between credit and deposit growth has also narrowed, indicating a more stable funding environment for banks.
The surge in IPOs signals growing investor participation and deepening capital markets. The number of IPO listings increased six-fold between FY13 and FY24, positioning India as a global leader in equity fundraising. This shift reflects rising confidence in Indian businesses and a maturing financial ecosystem.
Policy imperative
While these trends point to financial sector dynamism, the survey urged policymakers to ensure financialisation does not distort incentives or make growth excessively dependent on asset price movements.
A balanced approach – aligned with household financial savings, investment needs, and financial literacy – will be crucial in shaping India’s economic trajectory.
