Households not in distress, investing more in financial assets: CEA

Chief Economic Advisor V Anantha Nageswaran on Monday said that households are investing more in financial assets and their market value are not captured in the national income data.

The Economic Survey 2023-24, tabled in Parliament, said that registered investor base at NSE has nearly tripled from March 2020 to March 2024 to 9.2 crore as of March 31, 2024, potentially translating into 20 per cent of the Indian households now channelling their household savings into financial markets.

Addressing reporters, Nageswaran said, "households are not in distress" and they are investing in financial assets which have done very well. Also, savings in physical assets have improved and gone up from 10.8 per cent in fiscal 2020-21 to 12.9 per cent in 2022-23.

"Especially in last 4 years the foray of retail investors into stock market through SIPs and mutual funds has been quite prolifically documented. Our national income data do not record this at market prices and that is the reason why there is a feeling financial liabilities have grown faster than financial assets of households," Nageswaran said.

Asserting that households are doing quite well, Nageswaran said the default statistics of small-ticket loans also do not flag any signs of distress in the household sector.

As per the National Account Statistics 2024 data released by Ministry of Statistics and Programme Implementation (MoSPI) in May, the net household savings declined sharply to Rs 14.16 lakh crore in three years to 2022-23, from Rs 17.12 lakh crore in FY22, and Rs 23.29 lakh crore in FY21.

Eco Survey projects doable 7% growth for FY25

The Economic Survey has projected a prudent growth rate of 6.5-7 per cent for the current financial year, and much will depend upon the progress of the monsoon, Nageswaran added.

Addressing reporters here after the tabling of the Economic Survey 2023-24 in Parliament by Finance Minister Nirmala Sitharaman, Nageswaran said the economic growth rate of 7 per cent is doable but will depend on how the monsoon rains progress.

"We want to be prudent in projecting growth rate, that is why we have projected the country's economic growth at 6.5 to 7 per cent in FY24," he said.

According to him, there is momentum in the economy and private capital expenditure has picked up.

The Chief Economic Advisor (CEA), who prepared the pre-budget document, said India's external debt ratio is much lower compared to other emerging economies.

Nageswaran also said inflationary pressure is under control, and core inflation is running well below 4 per cent.

He also noted that India needs to create 80 lakh jobs per annum.

The CEA said the production linked incentive (PLI) scheme is beginning to deliver very handsomely in key areas.