The rich get richer

India's billionaires must get themselves a social conscience

The Business Standard (Rupee) billionaires club (BS, 16/2/2011) has 106 new members joining it in 2010, taking the number of “super-rich” in India to 657. India’s dollar billionaires are still in double digits, having increased from 33 to 45 last year (way below the numbers for China and Russia). The total net worth of India’s 657 Rupee billionaires was estimated at Rs 16 lakh crore, accounting for a fifth of the collective market value of all listed companies in India. While this is the narrow tip of a pyramid of highly unequal wealth, it gets even narrower at the very top with India’s top five billionaires — Mukesh Ambani, Gautam Adani, Azim Premji, Anil Agarwal and Anil Ambani — accounting for 30 per cent of the total net worth of the 657 super-rich. While the celebration of wealth and enterprise has been an integral part of rising India’s new entrepreneurial culture, this year the billionaires’ list will be viewed by most through two prisms. First, how many of India’s billionaires are in businesses where oligopolistic access to scarce resources has been a far more important driver of wealth creation than entrepreneurship in a competitive market or leadership in new technologies, markets and products. Second, the list will also be scrutinised to see how many of the new entrants are genuine first generation business leaders and how many have political godfathers. Sun TV’s Kalanithi Maran (rank 16 in 2010 as opposed to 23 in 2009) is a good example of a billionaire who has made good use of his family’s political connections. On both counts, the list is not inspiring.

One of the exciting aspects of the rise of the rich in India in the post-liberalisation era was that many of them, like N R Narayana Murthy (rank 31) and Nandan Nilekani (rank 40) became wealthy through genuine enterprise (though one must account for the help from land subsidies and tax exemptions in IT) in highly competitive markets. It would appear that the pace of change at the top has slowed down. While there are some new entrants to the list, and not all of them have benefited from the cornering of scare resources or their political connections, there have been fewer dramatic entrants to the ranks of India’s highly successful entrepreneurs in the past few years compared to the decade of 1990-2000. Perhaps, as India sustains its growth story and enters new markets, it will continue to produce new entrepreneurs.

The wealth and success of India’s billionaires, and the fact that many of them are increasingly going global (taking their business away from India), would suggest that the time may have come for the country’s political leadership to demand increased plough-back of this wealth within India. Equally important, India’s social leaders and conscience-keepers must urge the super-rich to share their wealth more liberally and be less ostentatious in their lifestyles in the interests of social and political stability.