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Over the past year and a half, the global economy has slumped, and India—despite being the fastest-growing G20 economy—hasn’t been immune. Indeed, risk capital pools—both public and private—have dried up, with the year ended March 2023 marking the first time in a decade that foreign direct investment (FDI) into India slowed down.

But even as foreign inflows dwindled, India’s domestic capital has remained resilient. Indeed, alternate investment funds and other domestic funds have raised significant capital from high-networth individuals (HNI), ultra HNIs, and domestic institutional investors.

In a panel discussion at the Delhi edition of YourStory’s flagship startup summit, TechSparks 2023, some of the brightest minds from the policy, banking, and broking space came together to discuss just that.

Over the course of a captivating 30 minutes, Sudarshan Chari, Executive Director & Head of SME banking at DBS Bank India; Ujjwal Jain, CEO of PhonePe’s wealth management platform Share.Market; and Pawan Kumar, Commissioner of CGST & CX for Delhi East, provided valuable insights into how domestic capital is forming the bedrock of India’s resurgence despite the prevailing global macroeconomic headwinds.

“India’s going through a domestic chain reaction—money is moving between the people who want to deploy it in businesses to the people who want that money to build businesses. That chain reaction is beautiful,” said Share.Market’s Jain. A veteran of the startup space, Jain has founded two startups that were acquired by PhonePe prior to helming PhonePe’s broking platform.

Jain also spoke about how even salaried individuals are increasingly seeking to deploy their disposable income into the public markets as they look to multiply their wealth. “In the last several years, the demand to invest in Indian markets has increased as people have realised that their savings need to be put into financial assets. The capital pool to actually bet on businesses is the highest it has ever been because there’s a belief that investing in Indian companies and public markets is the best place to be for long-term wealth creation,” Jain observed.

DBS’ Chari echoed Jain’s sentiments, saying that the growth of per capita income in the country has been strong in the recent past, creating a situation where there is ample capital available to be deployed in the markets. And this capital is something that a rapidly developing country like India needs, he said.

“With India becoming a services and manufacturing hub, there is a lot of capex and investment that is required. So, there is a demand [for capital] and there is a supply [of capital],” said Chari. In fact, Chari added, the pace at which pools of capital are forming has improved from 2000 to 2010 to 2020. “It will further fast-track as we get into 2030 is the way I see it,” said the banker.

CGST commissioner Kumar was on hand to speak of how the government has helped enable this domestic capital deployment. His own roles in the past, he said, included a focus on ensuring money got to the right places and reducing friction wherever possible. This approach has evidently panned out, and Kumar had the receipts to illustrate this.

“If you see from the point of view of market capitalisation, for example, 10 years back, our stock market capitalisation was somewhere around Rs 74-75 lakh crore. Now, it is almost about Rs 300 lakh crore,” Kumar said.

Jain, too, had some impressive numbers handy to illustrate just how enthusiastic Indians are getting about investing. In the week leading up to the event, India saw a half-dozen IPOs, including one for Tata Technologies. “Out of the total circulation of money in India, almost 6.5% got locked on a rolling basis across last week to put money in these IPOs or to get a possible allotment,” said Jain. Crucially, he continued, this exuberance is seeing money flowing into a myriad of sectors, which has even seen old-school companies such as Cello also looking to tap the public markets for funding. “If you ask me, in the new India, both investing capital as well as taking capital is only going to compound,” concluded Share.Market’s Jain.