Individual wealth in India to grow at 12.90% CAGR over five years

In FY16, total wealth held by individuals in India has grown by 8.5 per cent to Rs 304 lakh crore, according to an assessment by wealth management firm Karvy. Karvy predicts that the overall individual wealth in India is expected to grow to Rs 558 lakh crore from the current Rs 304 lakh crore at a CAGR of 12.90 per cent over the next 5 years

Asset-wise, Karvy found that the total individual wealth in financial assets grew by only 7.14% per cent to Rs 172 lakh crore in FY16, much slower than in FY15 when wealth had grown nearly 19 per cent mainly dampened by the bleak performance of direct equities. Karvy predicts that financial assets are expected to grow at a faster pace of 14.73% CAGR, nearly doubling in the next 5 years

Individual Wealth in physical assets stood at Rs 132 lakh crore, having grown 10.32% in FY16 compared to a 2% decline in FY15. Individual Wealth in Gold stands at Rs 65.90 lakh crore having almost half the share of physical assets, whereas wealth in real estate (excluding primary residences) come in second at Rs 55.47 lakh crore

FY16 witnessed stupendous growth in alternate asset classes at 84.70% vis-à-vis FY15. Karvy predicts the growth to continue in the next 5 years although at a slightly slower pace. Ducking the trend of a fall in equity markets, wealth held in mutual funds grew by 13% indicating a clear preference of investors moving towards professional management of wealth.

Karvy Private Wealth is the wealth management arm of the Karvy Group, and the observations were part of its seventh India Wealth Report 2016.

“While India is considered the bright spot among emerging economies, in the short term the economy is bound to slow a bit, given the government’s recent efforts to demonetise old, high-value notes. The victory of Donald Trump in the US presidential elections is also likely to result in some bumps in the road ahead for global markets and accordingly to the Indian market. However, in the long run, India is expected to outshine its emerging market peers, including China, owing to changing positive dynamics, especially the government’s reforms push (the Goods & Services Tax (GST), Real Estate (Regulation and Development) Act and the Bankruptcy Code, among others,” the report said.