India is building one of the biggest pools of household savings in the world, and that money could soon power the next wave of investment. According to a recent Goldman Sachs study, Indian households are expected to channel nearly $9.5 trillion into financial assets by 2035.
Right now, household savings have slowed compared to earlier years. A CareEdge Ratings report shows that household savings dropped to 18.1% of GDP in FY24, the lowest in nearly five years. But because India’s economy is growing so quickly, the total amount saved is still huge.
The way Indians save is also changing. A decade ago, most savings went into cash and bank deposits. Now, more people are investing through digital platforms and funds. The share of mutual funds in total household financial savings has climbed to 6% in FY23, up from less than 1% ten years ago, according to Economic Times analysis.
This shift could be powerful for the economy. When more money flows from savings into investments like equities, bonds, and infrastructure funds, it fuels industries, creates jobs, and reduces the government’s dependence on foreign borrowing. The Reserve Bank of India has also pointed out that strong domestic savings help the country handle global shocks and currency volatility.
Economists say that if even a small portion of this large savings base moves into productive investment, India could see faster capital formation and long-term growth. The government is already encouraging this through digital financial inclusion, tax incentives, and pension schemes like the National Pension System.
Still, some experts warn that high inflation and rising household debt could slow the flow of savings into investments. A report by Erigo India notes that post-COVID, many families are still cautious and prefer liquidity over riskier assets.
Even so, the picture is clear – India’s massive savings pool is waiting to be tapped. If households continue moving from saving to investing, that “savings glut” could soon become the country’s biggest source of economic strength.
