Investor Base Declines: Survey

Mumbai, Sept 18: | Updated: Sep 19 2003, 05:30am hrs
The survey on the Indian investing community undertaken jointly by Securities and Exchange Board of India (Sebi) and National Council of Applied Economic Research (NCAER) has some startling revelations. The number of investors in India during 2001-2002 has decreased and the share of mutual fund investors has also fallen.

Among the 26 states of the country, state of Gujarat has the highest number of equity investor households accounting for 25 per cent of the total equity investors in the country.

Besides, Gujarat along with AP has the highest level of bond investment activity in the country. However, as far as number of investor households region-wise in the country is concerned, the southern region is ahead with 45 per cent followed by 33 per cent in the western region while the northern and the eastern region have 11 per cent each investor households.

An interesting fact of the survey is the number of investors investing in mutual funds declined by 40 lakhs to 1.90 crore in 2000-2001 as against 2.30 crore in the previous survey of 1998-1999. The survey said, there was definite migration of investors from equity to the bond market during the period of the two surveys. During the recent survey it was estimated that 7.4 per cent Indian households totalling 2.10 crore individual investors had invested in equity or debenture or both in the year 2000-2001. Therefore it was felt necessary to capture the impact of these changes on the behaviour of Indian investors and another survey in association with NCAER was launched in 1999 and was based on a sample of 2,88,081 households selected from across the country. Other major findings of the survey includes: an estimated 1.31 crore or 7.4 per cent of all Indian households - totalling 2.10 crore individuals directly invested in equity shares or debentures or both during financial year 2000-01. The number of debenture-owning households and debenture-holders far exceeds equity investor households and equity investors. Of 1.31 crore investor households, 96 lakh households owned bonds or debentures whereas only 65 lakh investor households owned equity shares. The percentage of households investing in equity or debentures is more in urban areas than in rural areas.

These estimates also indicates that there is a definite migration of investors from equity market to bond market during the interregum of two surveys. Rural households appear to have preferred bonds to equity. The survey has also clearly revealed that number of non-investor households increased from about 15.60 crore in 1998-1999 to nearly 16.40 crore in 2001-2002 constituting nearly 92.60 per cent of all households. This percentage was 92 in 1998-1999.

Analysis of data shows that 71 per cent of non-investor rural households fall in the low income groups as compared to 40 per cent of total non-investor urban households.