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India’s household financial savings to average around 13 per cent of GDP over the next ten years as a base-case, says Goldman Sachs in its report.
Goldman Sachs said this trend mirrors global patterns, where rising incomes and maturing financial systems have driven households toward financial markets.
India’s household savings are expected to channel nearly $9.5 trillion into financial assets over the next decade, according to a report by Goldman Sachs. The report projects that household financial savings will average around 13% of GDP during this period, compared to 11.6% over the past ten years.
“India’s household financial savings to average around 13 per cent of GDP over the next ten years as a base-case (vs. average 11.6 per cent of GDP observed in the previous ten years),” Goldman Sachs said in the report.
The shift marks a continued move from physical assets such as real estate and gold towards financial instruments. Of the total inflows, more than $4 trillion is expected to go into long-term savings products like insurance, pensions, and retirement funds. Bank deposits are projected to draw about $3.5 trillion, while equities and mutual funds could see inflows of nearly $0.8 trillion.
Goldman Sachs noted that this trend mirrors global patterns, where rising incomes and maturing financial systems have driven households toward financial markets.
The report highlighted three key implications: first, these inflows will provide a steady domestic funding base for corporate capital expenditure without straining the current account deficit. Second, they could strengthen long-duration bond markets, anchoring sovereign yields and encouraging the issue of long-tenure quasi-sovereign and corporate bonds, aiding infrastructure financing. Third, higher savings in financial products are expected to expand retail participation in capital markets and fuel demand for wealth management services.
It also emphasised that household choices between financial and physical savings depend on income levels, inflation, interest rates, risk appetite, and access to financial markets. While advanced economies have seen a strong tilt towards financial assets, emerging markets like India still hold a significant share of savings in real estate and gold, pointing to considerable scope for further financialisation.
Meanwhile, India’s consumption is also going to get a boost after the government’s GST reforms. The Centre’s proposed two-tier Goods and Services Tax (GST) reform, featuring lower rates on household goods, could result in an average annual revenue loss of Rs 85,000 crore, but is expected to boost consumption by nearly Rs 1.98 lakh crore, according to an SBI Research report.
The Centre has suggested reducing the existing four-slab GST structure of 5, 12, 18 and 28 per cent to a two-tier system of 5 and 18 per cent, with a 40 per cent special rate for select items. The higher 40 per cent slab is proposed only for 5-7 demerit goods such as pan masala, tobacco and online gaming, according to the report.
The reforms are projected to drive a 0.6% rise in GDP, supported by higher consumption, SBI Research said.
(With Inputs from ANI)
Haris is Deputy News Editor (Business) at news18.com. He writes on various issues related to personal finance, markets, economy and companies. Having over a decade of experience in financial journalism, Haris h…Read More
Haris is Deputy News Editor (Business) at news18.com. He writes on various issues related to personal finance, markets, economy and companies. Having over a decade of experience in financial journalism, Haris h… Read More
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