The Securities and Exchange Board of India (SEBI) has introduced a revised methodology for estimating household savings flowing into the securities market, leading to higher savings ratios for the financial year 2024-25. The updated framework provides broader coverage of investments linked to capital markets and reflects changing household investment behaviour in India.
According to a research paper released by SEBI’s Department of Economic and Policy Analysis (DEPA), the revised methodology captures a wider range of financial market instruments that were not fully accounted for under the earlier system.
Gross Savings Ratio Revised Higher for FY25
Under the revised methodology, India’s gross savings rate for FY25 has been estimated at 34.94% of GDP. Using the earlier approach, the same figure would have been calculated at 34.47% of GDP.
The upward revision reflects the inclusion of additional securities market-linked investments and improved use of granular primary-source data.
SEBI stated that the new framework offers a more comprehensive picture of household participation in financial markets and better captures the growing shift toward formal investment products.
Household Financial Savings Also Increase
The updated methodology has also led to higher estimates for household financial savings.
For FY25:
- Household financial savings were estimated at 21.7% of GDP under the revised system
- Under the previous methodology, the estimate stood at 21.23%
- Net household financial savings were revised upward to 7.10% of GDP from 6.63%
The revised calculations indicate that Indian households are increasingly allocating savings toward financial instruments linked to capital markets.
Wider Coverage of Securities Market Investments
Previously, household savings estimates were primarily based on Reserve Bank of India (RBI) data related to mutual fund assets under management held by individual investors.
However, SEBI noted that the older methodology did not adequately include several important investment categories such as:
- Direct equity investments
- Debt securities
- Real Estate Investment Trusts (REITs)
- Infrastructure Investment Trusts (InvITs)
- Alternative Investment Funds (AIFs)
- Secondary market investments
- Investments linked to non-profit institutions serving households
The revised methodology incorporates these categories to provide a more accurate estimate of household participation in financial markets.
Household Securities Market Savings Rise Sharply
According to the revised calculations, household savings routed through securities markets reached approximately ₹6.9 trillion during FY25.
Under the earlier methodology, the estimate stood significantly lower at ₹5.42 trillion.
The increase reflects stronger participation in diversified financial products and wider investor engagement across capital market instruments.
Shift Towards Financial Assets Continues
The SEBI research paper also highlighted a gradual transition in household savings preferences away from traditional physical assets such as gold and real estate toward financial investments.
Despite growing inflows into mutual funds, households continued to remain net sellers of direct equities during FY25.
- Net direct equity sales by households during FY25 stood at ₹54,786 crore
- In FY24, net sales of direct equities were estimated at ₹69,329 crore
This suggests that while retail investors continue participating in markets through mutual funds and managed products, direct stock ownership trends remain relatively cautious.
Conclusion
SEBI’s revised methodology significantly broadens the scope of household savings estimation by including multiple capital market instruments previously excluded from calculations. The updated figures for FY25 indicate stronger household participation in financial assets and a gradual evolution in investment behaviour toward market-linked instruments.
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