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Dollar-millionaire Indians to double

BS Reporter  |  Mumbai 

Country 6th-highest contributor to global wealth growth; average household wealth triples in 10 yrs to Rs 2.70 lakh.

At a time when the civil society is at the throat of the Planning Commission for its Rs 32-a-day cut-off for the poverty line, a study has revealed the dollar millionaire club in India is expected to more than double to 403,000 by 2016 on the back of robust economic growth and impressive returns from the stock and property markets.

At one level, that’s a lot of people. Yet, the so privileged would be a sliver small enough to slip through the census cracks.

The total wealth of these millionaires, having minimum investible assets of $1 million, was also estimated to more than double to about $2.5 trillion by 2016, the second annual Global Wealth Report by Credit Suisse Research Institute said on Wednesday. It will put India at the third spot behind China and Brazil among 20 leading emerging countries of the world. India, the report says, is now the sixth highest contributor of global wealth growth.

Between January 2010 and June 2011, India’s total wealth increased by $1.3 trillion. In 2011, it reached $4.1 trillion, and is projected to more than double to $8.9 trillion in the next five years.

Household net worth or “wealth” is defined as the value of financial assets plus real assets (principally, housing) owned by individuals less their debts. In 2011 alone, India acquired 34,000 new millionaires. “However, details of Indian billionaires and similar high profile UHNW (ultra high net worth) individuals suggest that a higher-than-normal proportion may be more properly regarded as residents of other countries,” notes the report.

Emerging market $ millionaires 
Number (‘000)
  2011 2016* Change%
China 1,017 2,381 134
Taiwan 343 503 47
Brazil 319 815 155
South Korea 217 425 96
INDIA 204 510 150
Singapore 183 408 123
Mexico 175 344 97
Indonesia 112 242 116
Turkey 98 179 83
Russia 95 171 80
* Estimated                             Source: Credit Suisse

However, while India continued to climb up the ladder on the quantum of wealth and the expected growth, the disparity between the middle class and the wealthy has also increased. “While wealth has been rising strongly in India, and the ranks of the middle class and wealthy have been swelling, not everyone has shared in this growth and there is still a great deal of poverty,” says the report.

According to the study, 43 per cent of adults have wealth below $1,000 per adult, which is significantly higher than the world average of 27 per cent. On the other hand, a mere 0.4 per cent of the adult population has wealth over $100,000 per adult.

The report says the average wealth of an Indian has nearly tripled in the last 10 years to $5,500 (nearly Rs 2.70 lakh). Still, the average wealth for Indians is way below the global average of $51,000 and just about one per cent of the world’s highest per-adult wealth of $5,40,010 recorded in Switzerland.

The report says “the Indian stock market should provide almost 14 per cent annual returns, while we estimate Indian properties to rise on an average close to five per cent per annum”.

The report, which tracked the wealth market in the entire Asia excluding Japan, says India accounts for 15 per cent of the total HNWI population in the region, the second largest after China’s 44 per cent. However, the number of HNWIs remains extremely low in India, when compared with the total adult population. India had only one HNWI in every 5,000 of adult population at the end of 2010 and the ratio is expected to grow to one in two thousand adults by 2016. In comparison, China had one HNWI in every 2,000 of adult population (0.05 per cent) in 2010 itself and the ratio is expected to more than double to 0.13 per cent by 2016.

Incidentally, Asia Pacific has emerged as the key contributor of global wealth growth, accounting for 36 per cent of all global wealth creation since 2000, and 54 per cent since January 2010.

While the total global wealth has increased 14 per cent from $203 trillion in January 2010 to $231 trillion in June 2011, emerging markets remained the main wealth growth engine, with the fastest growth seen in Latin America, Africa and Asia.

The global financial major has further highlighted the fact that total household wealth in Asia Pacific increased 23 per cent from $61 trillion in January 2010 to $75 trillion in June 2011. "This sharply contrasted with the 9.2 per cent and 4.8 per cent total wealth growth in North America and Europe over the same period respectively, reflective of the global megatrend of the continued shift of economic power from the developed world to emerging economies," it explains.

The study finds that Europeans are sitting on much higher average debt per adult at $25, 550, versus $9,227 in Asia Pacific.

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First Published: Thu, October 20 2011. 00:36 IST