No slowdown for rich in India as million dollar households soar

A slowing economy and falling stock markets has had little impact on the wealth of the rich in India. In 2011, the number of millionaire households in India (with financial wealth of $ 1m or Rs 5.5 crore at current prices) rose by 28,000 or 21 per cent  to 162,000, according to a new report by Boston Consulting Group or BCG, a global consultancy firm. There were 134,000 millionaire households in 2011.

The number of ultra high networth individuals or UHNI (with financial wealth in excess of $ 100m or Rs 550 crore) rose to 278 in 2011 from 241.

The report titled “Global Wealth 2012: Battle to regain strength” puts the global private financial wealth at $ 122 trillion as of December 2011.

Here are relevant highlights of the 30-page document:

• In India, private wealth is expected to grow at a compounded annual growth rate of 19 per cent over the next 4 years to 2016. This is faster than the average 4 to 5 per cent global growth forecast. The report does not reveal the current Indian wealth but previous estimates by Karvy, an Indian stockbroking firm, put it at about $ 1.5 trillion or Rs 73,00,000 crore.

• Global private financial wealth grew 1.9 per cent to $ 122 trillion in 2011. It is expected to grow to $ 150 trillion by 2016. The rich in India would account for $ 2.7 trillion or 10 per cent of the overall global increase.

• The BCG report says that the wealth has grown significantly despite weak markets due to a strong GDP growth in developing countries like India. During 2011, the BSE Sensex tumbled 24.6 per cent resulting in an erosion of over Rs 20,00,000 crore in investor wealth. 

• The GDP growth was driven by high level of government and private consumption in countries like India and China. This led to wealth creation in these countries. The report expects strong GDP growth to drive wealth creation. It also expects stock market gains to contribute more to the wealth creation in countries like India and China over the next four years.

• The total number of millionaire households in the world reached 12.6 m. Out of these, US accounted for 5.1 m. Japan had 1.6 m while China had 1.4 million. The number of millionaire households in India at 162,000 is nearly a tenth of that in Japan and 12 per cent in China.

• America has the highest number of ultra high networth households at 2,928 followed by UK at 1,125, Germany at 807, Russia at 686 and China at 648. The number for India stood at 278 in 2011.

• In 2011, offshore wealth, defined as assets booked in a country with the investor having no legal residence or tax domicile, rose to $ 7.8 trillion, up close to 3 per cent over 2010. This was partly driven by flight to safety from investors in politically instable countries and partly by ultra high networth families based in rapidly developing economies. Switzerland is the largest offshore centre with Swiss domiciled banks booking wealth to the tune of $ 2.1 trillion.