The Hindu Business Line : Riches concentrated among 61,000 high net worth individuals: Study

Mr Predeep Dokania, Executive Vice-President, Global Private Client, DSP Merrill Lynch Ltd, Mr Shitin Desai, Executive Vice-Chairman, and Mr Baru S. Rao, Chief Executive Officer, Capgemini Consulting India Pvt Ltd, at a press conference in Mumbai on Wednesday. — Shashi Ashiwal

Mumbai , June 16

THE distribution of wealth in the country is heavily imbalanced. A major part of it is concentrated in the hands of a few ten thousand elite. There are 61,000 high net worth individuals (HNI) in India with total wealth as high as $267 billion or over Rs 12,00,000 crore at the end of 2003, according to a global study `World Wealth Report' conducted by investment bank, Merrill Lynch and IT services firm, Capgemini.

HNIs, as per the study, are individuals with financial assets of at least $1 million, excluding their primary residence. The HNI population in India has grown by 22 per cent in terms of numbers and total wealth in 2003 over the previous year thanks to the bull-run on the bourses, a healthy GDP growth and the emergence of non-traditional pockets of wealth such as the BPO industry.

In India there are an estimated 11,000 more people who fall in the HNI category this year over last year, said Mr Raj Sehgal, Country Head-India and Global NRI Market Manager for Global Private Client at Merrill Lynch, who addressed the local media today from Geneva through a conference call.

India has registered the highest growth by any country in the global study. The outlook for India is positive with forecast of 6.6 per cent real GDP growth for 2004, according to the study. Overall wealth growth was driven by stronger than expected upturn in North America and Asia, particularly in China and India.

The asset allocation of $267 billion by individuals in India is as following: one-third in equity, one-third in real estate and one-third in fixed income. Equity investments moved up from 20 per cent to about 33 per cent this year due to falling interest rates and the bull-run in the stock markets. Gilt funds and RBI Relief Bonds gained popularity during the year. Most of the wealth was deployed in local investments, as the Government's recently permitted window for Indians to invest overseas is yet to take off. The average rate of return across investments for the HNIs was at 15-20 per cent despite interest rates having bottomed out in the country, said Mr Pradeep Dokania, Executive Vice-President, Global Private Client at DSP Merrill Lynch Ltd.

According to Merrill Lynch, the numbers are sourced from information published by the World Bank and other international institutions and may therefore include gaps since it reflects only taxed wealth.

On the global front, China registered a 12 per cent jump in terms of number of HNIs to 2.36 lakh while the US HNI population grew by 14 per cent to 22.7 lakh. Global HNI wealth totals $28.8 trillion, a gain of 7.7 per cent in 2003.