Investments in India’s financial markets have witnessed an unprecedented rise over the past decade, with mutual funds, pension schemes and stock market capitalization recording massive growth, the government informed Parliament.
In a written reply to an unstarred question in the Lok Sabha on December 1, 2025, the Ministry of Finance revealed that Assets Under Management (AUM) of mutual funds increased by 508%, assets under the National Pension System (NPS) jumped by a staggering 1,685%, while overall market capitalisation of listed companies rose by 314% during the period from FY 2014–15 to FY 2024–25
The data was disclosed by the Minister of State for Finance in response to a question raised by a Member of Parliament seeking clarity on the changing pattern of household savings and investments in the country.
Reasons Behind the Surge
According to the government, the dramatic shift towards market-linked investments has been driven by several key factors:
- Strong macroeconomic fundamentals that have improved investor confidence
- Better corporate earnings, making equity investments more attractive
- Regulatory reforms that strengthened investor protection and market transparency
- Rising retail participation, especially among young and first-time investors
- Expansion of digital infrastructure, making investments easy through mobile apps and online platforms
- Increased financial literacy and higher awareness of market-linked products
The government noted that the improved accessibility of financial products and simplification of onboarding processes through digital public infrastructure played a crucial role in drawing new investors into the formal financial system
No Decline in Bank Deposits: Government
Contrary to fears that rising investments in equity and mutual funds might be hurting bank deposits, the government categorically stated in Parliament that there has been no decline in fixed deposits, savings accounts or current account deposits over the period.
In response to a specific question on whether investors were abandoning bank deposits in favour of market instruments, the Minister replied in the negative, suggesting that traditional savings instruments continue to retain investor trust even as financial markets expand
Economic Impact: Short, Medium and Long Term
The government further stated that the ongoing shift towards capital market investments is expected to positively impact the economy across all time horizons:
- Short-term: Greater market liquidity and stability
- Medium-term: Enhanced capital formation and corporate financing
- Long-term: Stronger economic growth driven by efficient capital allocation
The Finance Ministry underlined that rising mutual fund and NPS investments reflect increasing confidence in India’s economic prospects and maturity of its financial system, which in turn will aid long-term infrastructure and industrial development.
A Structural Shift in Savings Behaviour
Experts say the data highlights a structural shift in India’s saving habits, with households gradually moving from traditional low-return products towards professionally managed, market-linked investment avenues.
The sharp increase in pension assets also signals a growing culture of long-term retirement planning among Indians, which could significantly reduce future dependency on informal social security systems.
Conclusion
With mutual funds growing over five times, pension investments surging nearly seventeen-fold, and stock market capitalisation tripling in a decade, the government’s data paints a picture of a rapidly evolving financial landscape. The continued expansion of these sectors is expected to deepen capital markets, improve household wealth creation, and support India’s economic aspirations in the coming years.
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