As of March 2023, total household financial assets are estimated at Rs 363.8 lakh crore, equivalent to 135.0 percent of the gross domestic product (GDP).
In contrast, the outstanding liabilities amounted to Rs 101.8 lakh crore, accounting for 37.8 percent of GDP. The resultant net financial wealth (NFW) is estimated at Rs 262.0 lakh crore (97.2 percent of GDP), according to the RBI Bulletin. The pandemic period witnessed a jump in the financial assets and NFW for the two-year period from March 2020 to March 2022. In 2022-23, with the resumption of normal economic activities, the NFW also normalised due to a strong revival in both bank and non-bank lending to households coupled with a relatively moderate growth in financial assets.
For the entire period of study starting from June 2011 to March 2023, the financial assets rose at a compounded quarterly growth rate (CQGR) of 3.0 percent, while the liabilities expanded at a CQGR of 3.3 percent; NFW recorded a CQGR of 2.9 percent during the same period.
Deposits dominant
Deposits have sustained their dominance in total financial wealth in the last decade, though with an increasing interest towards other investment instruments, viz., equity and investment funds and insurance and pension funds. The share of equity and investment funds in total financial wealth increased by more than 50 per cent between 2011-12 and 2022-23. Amidst exponential growth in digital payments, the currency share in household financial assets has moderated.
The Indian household participation in the equity market has increased over time, with total demat accounts reaching 11.4 crore in 2022-23 from 3.6 crore in 2018-19. The share of listed equity holdings in the total financial assets of Indian households was 11.1 per cent as of March 2023.
The stock market decline after the onset of the pandemic pulled down the net financial wealth of households in Q4:2019-20 by around 3.0 per cent over the preceding quarter. This decline was more than offset by the accumulation of savings and deposits in 2020-21 due to the pandemic-induced restrictions on spending and the subsequent revival of the stock market. On a cumulative basis, the financial assets of households rose by Rs 123.2 lakh crore between the quarter-ended December 2019 and the quarter-ended March 2023.
