Individuals in India to see their wealth double in next 5 yrs

Karvy’s India wealth report released today highlights that Indians Individuals holding Rs 202 Lakh crore wealth today may see their wealth double in next five years.

By the end of next five years ie 2018, Karvy Private Wealth report expects overall Individual wealth to increase to Rs 411 Lakh crores.

Surprisingly more than half of Individuals wealth today i.e Rs 110 lakh crore comprises of financial assets, whereas only Rs 92 lakh crore of total Rs 202 lakh crore is held in physical assets.

The physical assets include assets as Real estate and Gold whereas excludes homes that individuals own and use for their own living.

The breakup of financial assets springs out more surprises. Out of Rs 110 Lakh crore while fixed deposits and Bonds constitute 23%, Direct Equity constitutes 22.1% and Insurance 17.2%. Mutual funds constitute only 3.2% while saving deposits cash and small savings constitute 13.7, 10.4 and 5.1% each.

However looking at the break-up of private equity 38.66% (Rs 9.14 lakh crore) of 24.31 lakh crore is what direct individuals have purchased while rest is promoters holdings (in individual capacities). Sunil Mishra CEO of Karvy Private Wealth expects the equity investments to grow at 10% in FY14 and post elections the growth should be faster i.e. 25% in FY15. Thereafter the investments are expected to grow 15% annually.

He added that while currently around 86.6% of Indians own home currently, the percentage should increase to around 91.1 in a few years.

The CEO said, “Presenting for the first time a single-view of Indian wealth across Financial Assets and Real Assets has been an eye-opener. While value of real estate holding with individuals is very large, 73% of that is in primary homes, and the rest Rs 31 lakh crore forms the wealth in real estate."

Also in the coming years, we see a reversal in the trend of very high fresh inflows while going into physical assets as we believe that macro-environmental conditions should bottom out in 2014, and financial Assets will start finding favor again. The India story has only taken a break: we are not done yet, he added.