India’s capital markets have exhibited strong performance, driving capital formation in the real economy, increasing the financialisation of domestic savings, and supporting wealth creation, according to the Economic Survey 2024-25, tabled by Finance Minister Nirmala Sitharaman.
Investor participation in capital markets has surged, with the number of investors growing from 49 million in FY20 to 132 million by December 31, 2024. This growth, coupled with active listing activity and recent measures by the Securities and Exchange Board of India (SEBI) to temper excesses, is expected to foster sustainable market expansion.
Strong macroeconomic fundamentals, healthy corporate earnings, supportive institutional investment, robust inflows from Systematic Investment Plans (SIPs), and increased formalisation, digitisation, and accessibility have all fueled the market’s continued growth.
The Survey highlights that primary markets continued to witness heightened listing activities and investor enthusiasm in FY25, despite market volatility and geopolitical uncertainties. Total resource mobilisation from primary markets (equity and debt) reached $111 billion from April to December 2024, 5% more than the amount mobilised during the entire FY24. India’s share in global IPO listings surged to 30% in 2024, up from 17% in 2023, making it the leading contributor of primary resource mobilisation globally.
The BSE market capitalisation to GDP ratio stood at 136% at the end of December 2024, rising significantly over the last 10 years. The positive performance of the Indian stock market was driven by strong profitability growth, rapid traction of digital financial infrastructure, an expanding investor base, and substantial reforms in products and processes.
The Survey also highlights India’s insurance sector, which is performing well and is projected to become the fastest-growing market among G20 nations over the next five years (2024-2028). The sector has continued its upward trajectory, with total insurance premiums growing by 7.7% in FY24, reaching $112 billion.
With an overall insurance penetration rate of 3.7%, below the global average of 7%, there is a notable gap in coverage that presents opportunities for insurers to expand their reach. By targeting tier 2 and 3 cities and rural areas where awareness and accessibility are limited, insurers can tap into new customer segments and stimulate growth.
The Survey further points out that India’s pension sector has grown significantly since the introduction of the National Pension System (NPS) and Atal Pension Yojana (APY). As of September 2024, the total number of subscribers reached 78.34 million, showing a year-on-year growth of 16% from 67.52 million in September 2023.
India’s economic landscape continues to evolve, with strong capital markets and a thriving insurance sector leading the way. The Economic Survey 2024-25 underscores the importance of continued reforms and strategic investments to sustain this growth trajectory and ensure broad-based financial inclusion.
