Indian households are finally beginning to save the way the rest of the world does — by putting a bigger share of their nest eggs into financial assets, rather than old favourites, land and gold.

According to the recently released first set of revised estimates of the GDP for 2015-16, over a third of all household savings are now in financial rather than physical assets. The share of financial instruments such as equity, mutual funds, bonds and bank deposits in the household sector’s savings rose to 34.4 per cent of gross savings in the economy as a whole for the year from 31.3 per cent in 2014-15.

On a nominal basis, the household sector had gross financial savings of ₹15,14,207 crore in 2015-16, up from ₹12,82,633 crore in 2014-15. This is good news for the financial services sector in a country where people tend to invest more in physical assets such as land and homes as well as precious metals such as gold.

In fact, investments in physical assets as a proportion of household sector savings has fallen below the 60 per cent mark for the first time in recent years to about 56.8 per cent. Central Statistics Office data show household investment in physical assets was ₹14,83,539 crore in 2015-16, at current prices, compared to ₹15,78,151 crore in the preceding year. Notably, savings in financial instruments exceeded savings in physical assets for the first time.

Though the combined investment in physical assets and precious metal jewellery for the household sector is a little higher, at ₹15,27,469 crore, compared to savings in financial instruments, the fact that financial savings have almost caught up with the value of savings in physical assets appears to indicate the growing financial maturity of the Indian saver, as well as a higher risk appetite.

Savings in gold and silver jewellery have been a little under 2 per cent of the savings of the household sector over the last few years and despite the dip seen in the 2015-16, that proportion has seen only a fractional change.

The dip in savings in gold and silver has come after a massive 24 per cent year-on-year increase in 2014-15, after the government eased restrictions on gold consumption to contain imports.

Borrowings up

Financial liabilities or borrowings of the household sector also climbed in 2015-16 to ₹4,31,755 crore from ₹3,63,385 crore.

That notwithstanding, the share of net financial assets (savings less liabilities) in gross savings climbed to 24.6 per cent from 22.4 per cent a year earlier.