Indian households have accumulated an impressive USD 9.7 trillion in wealth over the past decade, according to a recent report by Morgan Stanley. The significant rise in wealth is ushering in several economic shifts, including increased discretionary spending, a growing propensity for borrowing, and a surge in investments in the equity markets.
Financialization Trend Gains Momentum
The report highlights a trend of “financialization” in Indian households, where a growing portion of wealth is being allocated to financial assets rather than traditional physical assets like real estate and gold. Morgan Stanley noted, “Over the past decade, Indian households have accrued USD 9.7 trillion in wealth.” Excluding wealth held by business founders, household wealth now stands at approximately four times India’s trailing Gross Domestic Product (GDP), totaling about USD 8.5 trillion.
Equity investments have been a key contributor, adding roughly USD 2 trillion to household wealth, including shares held by business founders. Despite equities accounting for 20% of wealth creation in the past decade, they represent only about 3% of annual household savings, suggesting significant room for future growth in this asset class.
Gold continues to be a favored asset for Indian households, contributing 22% to the wealth generated over the last ten years. However, property remains the largest asset class for Indian households, dominating both in terms of its share in household balance sheets and annual investment flows. Real estate continues to be a cornerstone of wealth for most Indian families.
Boom Phase in Capital Markets
Morgan Stanley’s report also points to the current “boom phase” of India’s capital markets, indicating that the growth may surpass current market expectations. The report notes, “India’s capital markets are in a boom phase at present, and we think it has more legs than the consensus believes.”
India holds a unique position in emerging markets, with its stock exchange dating back to 1875, making it the oldest among emerging economies. Historically, India’s financial markets have been more developed than its broader physical economy, laying strong foundations for continued financial market expansion.
As wealth distribution among Indian households becomes more diversified, the report predicts sustained growth in household investments. This trend is expected to further bolster India’s financial markets, paving the way for robust economic gains in the coming years.
Morgan Stanley’s findings underscore the transformative changes in household wealth accumulation and investment patterns, suggesting a strong outlook for India’s financial sector and broader economic growth trajectory.
