Sebi's revised savings methodology boosts FY25 household savings ratio

The revised framework captures a wider range of securities market investments, leading to higher estimates of household financial savings and gross savings in FY25

India’s gross savings rate could be nearly 47 basis points (bps) higher in FY25 than previously estimated after the Securities and Exchange Board of India (Sebi) revised the methodology for calculating household savings routed through the securities market, according to a research paper released by the regulator.

 

The research paper, authored by officials from Sebi’s Department Economic and Policy Analysis (DEPA), notes that the rate of gross savings to GDP has increased to 34.94 per cent for FY25.

 

It would have been 34.47 per cent if the old methodology for computing securities market investments continued.

 

“Under the revised methodology, the household savings to GDP ratio for FY25 is 21.7 per cent compared to 21.23 per cent under the previous methodology. Similarly, net household financial savings improved to 7.10 per cent of GDP, up from the former estimate of 6.63 per cent,” notes the paper.

 

  The new framework

 

The paper added that while the Reserve Bank of India (RBI) provides data on the stock of household financial assets in addition to the household savings, the current coverage is limited to mutual fund’s assets under management belonging to individual investors.

 

It excludes the significant volume of assets held by individuals across equities, debt, real estate investment trusts (Reits), infrastructure investment trusts (InvITs), and alternative investment funds (AIFs).

 

Under the revised approach, household savings routed through the securities market stood at ₹6.9 trillion in 2024-25, compared with ₹5.42 trillion under the earlier methodology.

 

“The inclusion of new instruments and segments has provided a comprehensive coverage and better captures the shift in household savings from traditional physical assets (gold and real estates) towards financial instruments,” it notes.

 

The paper also emphasises that the computation using actual granular data from primary sources gives a realistic picture of the household savings, ensuring enhanced data quality and accuracy.

 

The revised methodology includes granular data, incorporating secondary market in various segments, new-age assets like Reits, InvITs, AIFs, and non-profit institutions serving households in the investor category.

 

The national savings data published by the RBI and the Ministry of Statistics and Programme Implementation (MoSPI) relied broadly on estimations for savings via the securities market.

 

“The most interesting part in this report isn't the headline. It is the fact that households were net sellers of direct equity to the tune of ₹54,786 crore in FY25 — and ₹69,329 crore the year before — even as they were record buyers of mutual funds. This is not a retreat. This is maturation. The Indian retail investor is booking gains on direct stockholdings and outsourcing fresh allocation to professional vehicles,” said Jimeet Modi, founder and chief executive officer (CEO), Samco Group.