New Delhi: The gold rally has boosted the value of gold held by Indian households to an estimated $3.8 trillion or 88.8% of gross domestic product (GDP), creating a positive wealth effect on the household balance sheet, according to a report released by Morgan Stanley on Friday.
The wealth effect from gold holdings is stoked further by lower interest payments due to monetary policy easing and increased disposable income from recent direct and indirect tax cuts, it said. The government recently implemented reductions in GST, in addition to the income-tax cuts announced earlier this year, aimed at boosting income of individuals. Gold prices rose 61.8% to a record high of ₹1.27 lakh per 10 grams so far this year.
The RBI also increased its gold purchases by around 75 tonnes to its gold reserves from 2024, leading to total holdings to 880 tonnes or 14% of India's total foreign exchange reserves, the report noted.
Within household financial savings, the share of equities reached an all-time high of 15.1% in FY25 from 8.7% in FY24 and around 4% pre-pandemic, while the share of deposits has eased to 35% in FY25 from 40% in FY24 and 46% pre-pandemic.
Morgan Stanley expects the share of equity in the household balance sheet to rise going ahead, driven by favourable demographics and increasing investor education.
The wealth effect from gold holdings is stoked further by lower interest payments due to monetary policy easing and increased disposable income from recent direct and indirect tax cuts, it said. The government recently implemented reductions in GST, in addition to the income-tax cuts announced earlier this year, aimed at boosting income of individuals. Gold prices rose 61.8% to a record high of ₹1.27 lakh per 10 grams so far this year.
The RBI also increased its gold purchases by around 75 tonnes to its gold reserves from 2024, leading to total holdings to 880 tonnes or 14% of India's total foreign exchange reserves, the report noted.
Within household financial savings, the share of equities reached an all-time high of 15.1% in FY25 from 8.7% in FY24 and around 4% pre-pandemic, while the share of deposits has eased to 35% in FY25 from 40% in FY24 and 46% pre-pandemic.
Morgan Stanley expects the share of equity in the household balance sheet to rise going ahead, driven by favourable demographics and increasing investor education.
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