Jaipur, December 29, 2023.

Uday Kotak, Sharing his year end musings. A Financial Sector Model for India’s dream: 9% annual growth, $30 trillion GDP by 2047.

India is transforming from a nation of savers to investors. The tussle between the saver/ borrower and issuer/ investor model is underway.

In the early 80s, the Indian saver had low confidence in financial assets versus gold and land. Slowly the saver moved some part to bank deposits, UTI and LIC.

Even in the 90s, investing in equities was considered “speculative”. Hence companies looking for capital went to the foreign institutional investor (FII). FIIs saw potential and bought into companies while the Indian saver stayed away. Companies raised capital through the less known Luxembourg stock exchange. India’s capital market was being exported.

Some of us highlighted this phenomenon to SEBI. That began the private placement market (QIP) in early 2000s. Hence FIIs could also buy on Indian markets. The Indian saver’s interest in markets improved after the global financial crisis.

That saver is now savouring the joys of investing. Mutual fund platforms, cash equities and derivatives markets, insurance funds, global private equity in India, other platforms like AIFs, lower tax regime for equity, have all converted a saver to an investor.