Indian households have accumulated USD 9.7 trillion in wealth over the last 10 years, according to a new report from Morgan Stanley. These developments are driving economic transformation, including an increase in discretionary goods, a shift towards financial assets and an increasing interest in equity investments.
Wealth accumulation and economic change
The Morgan Stanley report revealed a decade of accumulated wealth among Indian households, totaling USD 9.7 trillion. This increase is affecting India’s financial position, resulting in higher deficit spending, more borrowing and higher investment in financial assets.
The trend in the economy
The report identified a trend in “financialization,” where households shift more wealth from traditional physical assets to financial assets. Investments in equities alone contributed USD 2 trillion, although they currently represent only 3% of annual household savings, suggesting that growth is possible.
Dominance of gold and property
Gold and real estate remain popular assets in India. Gold accounted for 22% of the decade’s wealth creation, while property continues to be the largest asset, playing an important role in household wealth.
Capital markets in boom phase
Morgan Stanley also highlighted India’s strong capital markets, which it described as being in a “boom phase” with potential for future growth. Established in 1875, the Indian Reserve Bank is the oldest in emerging markets, providing a strong foundation for further financial market expansion.
Future outlook
With greater diversity in the distribution of wealth, Morgan Stanley predicted that investment in households will continue to grow. This trend, they say, will bolster India’s financial markets and pave the way for future economic advancements.
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