India's Financial Evolution: From Savers to Investors

At the CII Financing Summit 3.0, Deepak Mohanty of PFRDA highlighted India's shift from a nation of savers to investors. The trend signals growing confidence in the financial system, increased financial literacy, and expanding investment opportunities driven by tech advancements and financial inclusion.

Deepak Mohanty, Chairperson of Pension Fund Regulatory and Development Authority (PFRDA), declared on Tuesday that India's ongoing transition from a nation of savers to investors denotes a significant shift in the country's economic and financial landscape. Speaking at the Financing Summit 3.0 hosted by the Confederation of Indian Industry (CII) in Mumbai, Mohanty emphasized that this change reflects growing confidence in the financial system, improved financial literacy, and broader investment opportunities.

In his keynote address, Mohanty pointed out that the share of cash and bank deposits in household financial assets is declining while investments in bonds and equities are on the rise. He noted that financial savings for social security, such as insurance, pensions, and small savings, are also steadily increasing. As India aims to become a high-income country over the next 25 years, Mohanty stressed the need for an average annual growth rate of around 8% and an investment rate of approximately 36% of GDP per annum.

Highlighting the role of technological advancements, Mohanty noted that increased smartphone usage and the proliferation of fintech have made investment opportunities more accessible. He also emphasized India's shift from risk-aversion to risk-taking in financial behavior, evidenced by a rise in Demat and MF SIP accounts, and growing interest in innovative investment instruments. Other experts at the summit echoed these views, stressing the importance of financial literacy, innovative financing mechanisms, and robust consumer protection to sustain this transition.

(With inputs from agencies.)