BUSINESS AND ECONOMY : WHAT IS HAPPENING TO YOUR SAVINGS? ARE YOU INVESTING?

BY ROBIN GHOSH,

ECONOMIST AND BUSINESS MENTOR

KOLKATA, 22 JANUARY 2024:

As an economist and business analyst, I feel blessed as the new year has brought some good news.

What is that? Well, the news is: India is turning from a savings community to an investors community.

Generally speaking, middle class Indians have a higher propensity to save than invest.

In Chanaky’s Arthashastra savings was given due importance. And in India, savings is embedded in the family value system.

Though savings is considered in India a great virtue, investment is not. If at all investment is to be made, it should be secured like fixed deposits in bank, gold or real estate.

Investment in the stock market is no no. It is labeled as speculative. Householders consider this as risky. Only a handful plays in the stock market game.

Recently, Uday Kotak, Founder and former MD of Kotak Mahindra Bank, made interesting observations: he considers – India now a nation of investors.

He observed:

1. India has transformed from a nation of savers to a nation of investors.

2. More and more people are parking their surplus funds in mutual fund and equity market.

3. In the 80s, India’s saving community had low confidence in financial assets compared to gold and land.

4. In the 90s, the saving brotherhood believed investment in equities as speculative and too risky.

5. Fortunately, things have changed now – the coming year is expected to bring more joy – more and more people will invest in mutual funds platforms, cash equities and derivative markets.

The changing mindset – from savers to investors – will pump the stock market, create new sources of fund flow for companies to set up new projects and expand existing ones.

The impact of this transformative change will be on many fronts. From banking to stock market administration, investors education and so on.

Observes Uday Kotak-

“We must avoid bubbles through policy, regulations.”

We must continue to carry investors’ education, ensure quality documentation.

The economy is on song. It is time we redesign the stock market as a powerful canon of growth and make India a big market for global investors.