February 01, 2025 | By Pratik Thorat
In an optimistic assessment of India’s financial landscape, the Economic Survey 2024-25, presented by Union Finance Minister Nirmala Sitharaman on January 31, reveals a striking surge in retail investor participation in the country’s mutual fund sector. The survey highlights an encouraging trend that demonstrates the growing confidence of retail investors in long-term investing through Systematic Investment Plans (SIPs). SIP flows, a popular and accessible mode of investment, have more than doubled over the past three years, a trend that has reshaped the landscape of India’s mutual fund industry.
This report, tabled in Parliament ahead of the Budget 2025, not only showcases the growth of retail investment but also delves into key macroeconomic indicators, GDP projections, and other challenges facing the Indian economy. However, it is the surge in SIP participation and the broader trend of retail investors turning to mutual funds that stands out, painting a picture of a rapidly maturing retail investment culture in India.
Key Highlights from the Economic Survey 2024-25
- SIP Flows Surge: Monthly average gross SIP flows have more than doubled in the last three years, increasing from ₹0.10 lakh crore in FY 22 to ₹0.23 lakh crore in FY 25 (up to December 2024).
- Retail Investor Growth: There were over 10 crore SIP accounts as of December 2024, a significant increase from 5.2 crore SIP accounts in FY 2022.
- Total Assets in SIPs: Assets managed through SIPs have grown to ₹13.6 lakh crore, up from ₹5.8 lakh crore in FY 2022, and ₹10.7 lakh crore in FY 2024.
- Increased Mutual Fund Ownership: Mutual fund ownership in listed companies has reached an all-time high of 9.5% in Q2FY25, up from 8.7% in FY24.
- Retail Investor Participation: The number of unique mutual fund investors has doubled, reaching 5.6 crore as of December 2024, compared to just 2.9 crore in FY 2021.
- Strong Mutual Fund Growth: The total asset size of the mutual fund industry touched ₹66.9 lakh crore in December 2024, reflecting a growth of 25.3% from March 2024.
What Does This Surge in SIP Flows Mean?
The increase in SIP flows is a testament to the growing participation of Indian retail investors in mutual funds. SIPs allow investors to commit small, regular sums of money into mutual funds at fixed intervals. This approach not only makes investing more accessible by lowering the entry barriers but also helps investors mitigate market volatility through rupee cost averaging.
The dramatic rise in SIP flows from ₹0.10 lakh crore in FY 2022 to ₹0.23 lakh crore in FY 2025 is indicative of a growing financial awareness among retail investors. With a steady rise in the number of SIP accounts, these investors are increasingly viewing mutual funds as an attractive avenue for building long-term wealth.
Table: Key Data Points from the Economic Survey 2024-25 on SIP Flows and Mutual Fund Ownership
| Metric | FY 2022 | FY 2024 | FY 2025 (up to Dec) |
| Monthly SIP Flows (₹ in Crore) | ₹0.10 lakh crore | ₹0.18 lakh crore | ₹0.23 lakh crore |
| SIP Accounts (in Crores) | 5.2 crore | 8.5 crore | 10 crore |
| Assets Managed through SIPs (₹ in Crore) | ₹5.8 lakh crore | ₹10.7 lakh crore | ₹13.6 lakh crore |
| Mutual Fund Ownership in Listed Companies (%) | 8.7% | 9.0% | 9.5% |
| Unique Mutual Fund Investors (in Crores) | 2.9 crore | 5 crore | 5.6 crore |
| Total Mutual Fund Assets (₹ in Crore) | ₹34.5 lakh crore | ₹53.3 lakh crore | ₹66.9 lakh crore |
The data points presented in the table above clearly outline the exceptional growth in the number of SIP accounts, the quantum of monthly SIP flows, and the overall increase in mutual fund assets. These statistics are reflective of a much larger and more engaged retail investor base.
Why Are SIPs Gaining Popularity?
There are several key factors that have contributed to the massive rise in SIP flows over the last few years. Here are some of the major reasons behind the trend:
1. Accessibility and Affordability
SIPs are an easy and affordable way for small investors to access the equity markets. With the flexibility to start an SIP with as little as ₹500 a month, they offer an opportunity for individuals to participate in wealth creation without needing large sums of capital. This has democratized investing, allowing a broader section of the population to become involved in the stock market, which previously may have been inaccessible to them.
2. Financial Literacy and Awareness
The rise in SIPs can also be attributed to the increasing financial literacy among the Indian population. Over the past few years, there has been a concerted effort from both the government and private sector to educate the public about the benefits of investing, particularly in mutual funds. Campaigns focused on explaining concepts like compounding, rupee cost averaging, and long-term wealth creation have resonated with retail investors.
3. Stock Market Performance and Economic Growth
The performance of the Indian stock market has also played a crucial role in driving SIP investments. Strong market performance, particularly since the post-pandemic recovery phase, has encouraged investors to view SIPs as a reliable and profitable long-term investment vehicle. The Economic Survey highlights a robust growth outlook, with a projected GDP growth range of 6.3% to 6.8% for FY26, which adds to the optimism among retail investors.
4. A Safe Investment Option
SIPs offer an automated, disciplined approach to investing, which can reduce the temptation to time the market. For many retail investors, SIPs represent a more stable and less risky investment option compared to individual stock picking. Over time, SIPs smooth out the effects of market volatility, as the investor buys more units when the market is down and fewer when the market is up, lowering the overall cost of investment.
5. Government and Policy Support
The government’s push for a formalized and regulated investment landscape has also played a role. With the introduction of tax exemptions and reforms that enhance the attractiveness of mutual funds, the retail investor base has expanded significantly. Further, the government’s initiatives to deepen financial inclusion have facilitated the growth of mutual fund investors from smaller towns and cities, expanding the reach of SIPs.
The Broader Implications for India’s Economy
The rise in retail investor participation through SIPs has significant implications for the broader Indian economy. As more retail investors park their savings in mutual funds, the overall savings rate in the country could increase. This, in turn, could fuel greater investment in the capital markets and support long-term economic growth.
Moreover, as SIPs drive greater mutual fund ownership in listed companies, it could lead to improved corporate governance, with fund managers advocating for more transparency and accountability from the companies they invest in. This would not only benefit the investors but also enhance the stability and credibility of India’s capital markets.
Challenges Ahead: Balancing Growth with Caution
While the surge in SIP flows is undoubtedly a positive trend, the Economic Survey also cautions about the need to ensure that this growth is sustainable. As the number of retail investors grows, so does the complexity of managing their needs and expectations. The mutual fund industry will need to adapt to this shift by improving investor education, enhancing transparency, and offering innovative investment products that cater to the needs of this new wave of investors.
Furthermore, while SIPs are often viewed as a safer investment option, they are not immune to market risks. The continued performance of the Indian economy, both in terms of GDP growth and market stability, will play a significant role in determining the future trajectory of SIP inflows.
Conclusion
The surge in SIP flows and the increasing participation of retail investors in the mutual fund sector is a clear indication of the evolving investment landscape in India. With the Economic Survey 2024-25 highlighting these positive trends, the future of SIPs looks incredibly promising. Retail investors, empowered by greater financial literacy and accessibility, are now more engaged than ever in shaping the country’s investment ecosystem.
As we move toward Budget 2025, it will be interesting to see how the government continues to support and encourage this wave of retail investing, ensuring that it remains a key driver of both individual wealth creation and the broader economic growth of India.