New Delhi [India]: Indian households have accumulated a remarkable USD 9.7 trillion in wealth over the past decade, according to a recent report by Morgan Stanley.
The report also highlighted this substantial wealth growth is driving a number of economic shifts in the country, including increased spending on discretionary goods, a greater inclination toward borrowing, and higher investments in the equity market.
The report pointed to a trend of “financialization” in India, as households begin to allocate more of their wealth into financial assets rather than traditional physical assets.
It said “Over the past decade, Indian households have accrued USD 9.7 trillion in wealth”.
It estimated that, excluding wealth accrued by business founders, household wealth has reached roughly four times the country’s trailing Gross Domestic Product (GDP), totalling around USD 8.5 trillion.
Within this overall increase, equity investments have been a standout asset class, contributing around USD 2 trillion in wealth creation, including assets held by founders.
The report also added that despite accounting for 20 per cent of wealth creation over the last decade, equities make up only about 3 per cent of annual household savings, indicating potential for future growth.
It also stated that the Gold remains a favoured asset among Indian households, contributing 22 per cent of the wealth generated over the last decade. Property, however, remains the largest asset class, both in terms of its value on household balance sheets and the annual flow of investment, as it continues to be a cornerstone of wealth for most households.
“India’s capital markets are in a boom phase at present and we think it has more legs than the consensus believes” it added.
Morgan Stanley noted that India’s capital markets are in a “boom phase,” suggesting that this growth may exceed current market expectations.
The report also highlighted India’s unique position in emerging markets, with a stock exchange dating back to 1875, making it the oldest among emerging markets. Historically, India’s capital markets have been more developed than the broader physical economy, indicating strong foundations for continued financial market expansion.
As India’s wealth distribution becomes more diversified, the report predicts that this trend will lead to sustained growth in household investments, further strengthening India’s financial markets and setting the stage for future economic gains.