India’s richer households are fuelling a market-investing boom

India's economic growth is poised to be fueled by robust domestic consumption, ongoing public infrastructure investments, and an uptick in private sector investments, according to a report by Crisil. The International Monetary Fund (IMF) predicts that India's per-capita GDP will surge by over 9% between 2027 and 2030, driven by escalating incomes and productivity advancements.

As per-capita income rises, households are anticipated to channel more funds towards savings, resulting in heightened participation in investments linked to financial markets. This, in turn, is expected to bolster investment and financial market development, thereby sustaining India's economic momentum. By 2030, India's escalating per-capita income should position the nation for a more robust growth trajectory and a more significant role in the global economy, the report asserts.

Furthermore, the report highlights a paradigm shift in the manner Indian households allocate their savings, with an increasing proportion of the nation's substantial household savings pool migrating towards market-linked instruments. This shift has propelled the growth of the mutual fund industry, as the share of mutual funds in the annual household savings flow expanded from 3% in 2020 to 13% in 2025.

The mutual fund industry's assets under management (AUM) have more than doubled, climbing from Rs 31.43 lakh crore in March 2021 to Rs 73.73 lakh crore in March 2026, marking an 18.60% compound annual growth rate (CAGR). This outpaced the growth of bank deposits, which increased by 11.2% over the same period. The AUM of the mutual fund industry reached a record Rs 82.03 lakh crore in February 2026.

Crisil attributes this growth to rapid digitalization, enhanced financial literacy, and a preference for systematic investment plans (SIPs). In essence, this transformation underscores, the report notes, a rising formalization of household finance, wider SIP-driven retail participation, expanding awareness, digital access, and regulatory credibility, collectively expanding the industry's capacity to amass assets beyond cyclical market support.