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

• Indian households are increasingly shifting savings from traditional deposits to equities and market-linked instruments.

• Equity and mutual fund share in household savings rose from ~2% (FY12) to over 15% (FY25).

• SIP inflows surged, reflecting disciplined, long-term investing behavior.

• Term deposit reliance declined, indicating diversification rather than replacement.

• Rising direct and indirect participation has significantly boosted household equity wealth.

India’s household savings landscape has undergone a marked transformation over the last decade, with equities emerging as an increasingly important destination for financial resources. Insights from the Economic Survey 2026 point to a fundamental reorientation in how families deploy incremental savings, signalling both deeper financial market development and changing attitudes toward risk.

Presented in Parliament on January 29, the survey highlights a steady move away from traditional, low-yield instruments toward market-linked options, particularly equities. This transition reflects not only structural improvements in access to capital markets but also a growing willingness among households to participate in long-term wealth creation through investments tied to market performance.

The shift is clearly visible in the composition of household financial savings. Between FY12 and FY25, gross financial savings expanded significantly, alongside a pronounced redistribution across asset classes. The combined share of equities and mutual funds in annual household savings climbed sharply—from roughly 2 percent in FY12 to more than 15.2 percent by FY25. This change has unfolded in tandem with a surge in systematic investment plan (SIP) activity. Average monthly SIP inflows increased nearly sevenfold, rising from below ₹4,000 crore in FY17 to over ₹28,000 crore in FY26 (April to November).

Once a relatively minor component of household balance sheets, equity investments now occupy a central role in financial wealth. Broader participation and multiple access channels have supported this expansion, while the continued development of debt-linked instruments is seen as a natural progression toward more balanced and diversified portfolios aligned with long-term financial goals.

The growing popularity of systematic investing underscores a shift toward disciplined, sustained engagement with markets across economic cycles. At the same time, reliance on traditional term deposits has moderated. Their share in household savings declined from over 58 percent in FY12 to about 35 percent in FY25, after touching a low of 31.9 percent in FY22. According to the survey, this trend points to diversification rather than replacement, with households adding equity exposure without fully abandoning conventional savings avenues.

Another notable dimension of this evolution is the rising share of individuals in overall equity market ownership, achieved through both direct stockholding and indirect routes such as mutual funds. The proportion of individual investors grew from around 11 percent in FY14 to 14.3 percent in FY19, reaching 18.8 percent by September 2025. In value terms, individual equity holdings expanded dramatically—from approximately ₹8 lakh crore in FY14 to nearly ₹84 lakh crore by September 2025.

While direct participation increased gradually—from just under 8 percent in FY14 to about 9.6 percent by September 2025—the indirect route saw much faster growth, with its share almost tripling to 9.2 percent over the same period. Between April 2020 and September 2025 alone, household equity wealth is estimated to have risen by around ₹53 lakh crore, underscoring the role of sustained market participation in long-term wealth accumulation.

Together, these trends illustrate a decisive shift in household financial behaviour, with equities now firmly embedded in savings strategies and playing a growing role in shaping India’s wealth-building journey.