Economic Survey 2024: 'Households are not in distress, investing in financial instruments,' says CEA Nageswaran

Budget 2024, Economic Survey: Chief Economic Advisor V. Anantha Nageswaran on Monday said the households in India are not in distress and investing in fully in financial instruments. Addressing a media conference on Monday after the Economic Survey was tabled in the Parliament ahead of the Union Budget 2024, CEA Nageswaran said in the last four years, retail investors have increased their investment in stock markets through systematic investment plans.

"Household savings and physical assets have improved. Households are not in distress. They are investing in financial instruments, which have done very well in the last four years. Retail investors have increased their investment in stock markets through systematic investment plans, mutual fund plans. That is why there is a feeling that financial liabilities have grown faster than financial assets. So, households are doing pretty well," Said CEA Nageswaran

In the Economic Survey it was noted that apart from private corporations, households have also been at the forefront of the capital formation process. The growth in housing sales in cities has been particularly impressive, indicating that urban households are diversifying the deployment of their savings. 

In 2023, residential real estate sales in India were at their highest since 2013, witnessing a 33 per cent YoY growth, with a total sale of 4.1 lakh units in the top eight cities. 

Quoting numbers by real estate research firm Proptiger, the survey noted that new supply witnessed an all-time high, with 5.2 lakh units launched in 2023,
as against 4.3 lakh units in 2022. The momentum continued in Q1 of 2024, witnessing recordbreaking sales of 1.2 lakh units, clocking a robust 41 per cent YoY growth. "New supply has consistently exceeded one lakh units since Q2 of 2022, underscoring persistent demand-supply dynamics in the housing market," the survey noted. 

It further said the initiatives in the social sector have also translated into rising consumption spending, as evident from the results of the latest Household Consumption Expenditure Survey (HCES) 2022-23. The HCES throws many reassuring findings on inclusive growth in the past decade.

The monthly per capita consumption expenditure (MPCE) in 2022-23 increased in real terms in both rural and urban areas over 2011-12. The difference between rural and urban MPCE also declined in percentage terms.

The survey further said the Indian capital markets have seen a surge in retail activity through direct (trading in markets through their accounts) and indirect (through mutual funds) channels in the last few years. 

"The individual investor's share in the equity cash segment turnover was at 35.9 per cent in FY24. The number of demat accounts with both depositories rose from 1,145 lakh in FY23 to 1,514 lakh in FY24. The impact of this influx of individual investors in the market is also reflected in new investor registrations with the exchanges, their share in total traded value, net investments, and ownership in the listed companies. For instance, the registered investor base at NSE has nearly tripled from March 2020 to March 2024 to 9.2 crore as of 31 March 2024, potentially translating into 20 per cent of the Indian households now channelling their household savings into financial markets," the survey stated.