“The Indian stock market is a bottomless pit. Why would I risk my money on shares when I can get 8 to 9 percent on fixed deposits?” asked Harshala Apte, a primary schoolteacher in Mumbai whose father lost more than half his net worth in a bear run on the stock markets in 2009.
That said, fund managers say they will consider the new scheme, despite the additional costs.
“It’s a collective failure on our part that in a country of 1.2 billion people our combined assets are what? Some 220 billion rupees,” JPMorgan Asset Management India CEO Nandkumar Surti said.
Longer-term, the new scheme may herald a shift in India from what one fund manager executive calls an opportunistic model of attracting investors, to a structural one, emulating the 401k pension model in the US.
For now, India does not allow mutual funds to develop pension plans, instead using a state-managed provident fund that invests mainly in government bonds. Until such a plan is brought in, the government is likely to struggle to win around people like Kashinath, who is still smarting from his emu bet.
“Can you help me get my money back? There’s a new bank that’s promising good returns, I’ll probably put it there,” he said.