Economic Survey: Mutual funds' share of household savings jumps sevenfold, FDs slip to 35%

The Economic Survey 2026 indicates a major shift in India's household financial savings over the past decade, reflecting a fundamental change in how additional financial resources are allocated. The transition is characterised by a steady shift towards market-linked instruments, especially equities, reflecting both structural changes in the financial system and changing household risk preferences, the survey, tabled in Parliament on January 29, has said. The evolving equity orientation is also evident in the flow of household financial savings. Between FY12 and FY25, gross financial savings increased substantially, accompanied by a notable reallocation across instruments. "The share of equity and mutual funds in annual household financial savings increased from around 2 percent in FY12 to over 15.2 per cent in FY25. This shift has coincided with a steady rise in SIP contributions, with average monthly SIP flows increasing seven times from under Rs 4,000 crore in FY17 to over Rs 28,000 crore in FY26 (April-November)," it said. Equity investments, once secondary to household balance sheets, are now a major part of financial wealth, supported by broader participation and more diverse access channels. The growth of debt-linked instrument markets is a logical next step toward achieving balanced, diversified portfolios and meeting long-term financial objectives. The growing prevalence of systematic investments reflects a shift towards long-term and sustained household engagement with savings being channelled in a disciplined manner across market cycles. In contrast, the share of term deposits declined from over 58 percent in FY12 to around 35 percent in FY25, after having fallen to as low as 31.9 per cent in FY22, the survey said. This pattern indicates portfolio diversification rather than displacement, with households adding equity exposure to their existing savings instead of completely substituting away from traditional instruments. A notable aspect of the move to equities is the growing proportion of individuals in total equity market ownership, accomplished through both direct and indirect means. “The share of individual investors increased from around 11 percent in FY14 to 14.3 percent in FY19, and further to 18.8 per cent by September 2025. In absolute terms, individual equity holdings expanded to around Rs 84 lakh crore by September 2025, from just Rs 8 lakh crore in FY14,” it said. While the direct participation of individuals in equity markets grew slowly, rising from just under 8 percent in FY14 to around 9.6 percent by September 2025, the indirect share nearly tripled, reaching 9.2 percent during the same period. From April 2020 to September 2025, household equity wealth is estimated to have grown by about Rs 53 lakh crore. This highlights how ongoing engagement in the markets has been crucial for long-term wealth building.