Watch the downstream flows of Gangetic investments

A worrisome portion of our household SIP flows go into IPOs that don't add productive capacity

- SWANAND KELKAR

Anyone who has seen the Ganga in the upper reaches of the Himalayas—especially its Bhagirathi portion on its way from Gangotri to Devprayag—and then its more expansive but slower flow in the lower Gangetic plains might struggle to believe that it is the same river. What starts as a sparkling gush of pristine water turns brown as it meanders its way to the sea.

Something similar is happening with domestic flows. The 'Gangotri' (or origin) of capital flows in India in recent years has been the humble but pure Systematic Investment Plan (SIP)—a simple yet powerful means of investment by which savers buy mutual fund units at predetermined intervals, such as every month or even week, so as to maintain the discipline of investing and benefit from the opportunity of less expensive purchases when the market falls. Investments through this route have grown vastly across the country.

From a modest ₹3,000 crore per month in 2016, when the Association of Mutual Funds in India (AMFI) started reporting this data, the figure has surged to over ₹28,000 crore: an annual figure of almost $40 billion. Jefferies research estimates that Indian public equity markets received inflows of $100 billion in 2024 and are on track to receive a similar amount this year as well.

In addition to SIP flows, investments made by the Employees' Provident Fund Organisation (EPFO) and the National Pension System (NPS) have added to this total. These steady inflows have underpinned the resilience of the Indian equity market in recent years, despite heavy intermittent selling by foreign funds.