Personal Finance

Where India ranks in wealth creation

Arvind Jayaram | Updated on January 23, 2018




India’s wealth has trebled since 2000, but lags the pack of fast-emerging nations

The last 15 years have witnessed an explosion in wealth creation across the BRICS (Brazil, Russia, India, China and South Africa) bloc. India accounts for the second-largest share within the BRICS grouping of the overall global wealth pool of $263.2 trillion as of 2014, after China.

But despite a 209.9 per cent growth in the cumulative wealth of adults in India — their financial and non-financial assets, minus their debt — to $3.6 trillion during the 2000-2014 period, the country emerges as the laggard in the pack of fast-emerging nations, with its compatriots achieving even faster growth.

Russia grew its wealth at the fastest pace, clocking a 584.4 per cent rise that even trumped the 358.9 per cent growth achieved by China. Brazil, too, could manage a 287.6 per cent increase in wealth, while South Africa just managed to keep ahead of India with a 225.6 per cent jump in adult wealth during the 15-year period, according to data from Credit-Suisse Research Institute.

Global wealth

When viewed from the perspective of growth in the country’s share of global wealth, India has fared poorly: the country’s share of global wealth rose from 1 per cent in 2000 to 1.4 per cent in 2014. In contrast, China’s global wealth doubled from 4 per cent to 8.1 per cent during the same period. Brazil, too, was able to ferociously stake claim to 1.2 per cent of global wealth in 2014, up from 0.7 per cent in 2000, while Russia’s share grew from 0.3 per cent to 0.8 per cent, a bigger jump in percentage point terms than what India was able to achieve.

Of course, India’s poor performance has to take into account sharp depreciation of the rupee in recent years; it had increased its share of global wealth to 1.5 per cent by 2012 before the slide in the rupee took place. But it’s important to note that other BRICS countries faced similar changes. South Africa was the worst-off in terms of global wealth share, managing to grow it from 0.2 per cent in 2000 to 0.3 per cent by 2004, where its share has remained stagnant since.

India was at the bottom of the pile again when it came to average wealth per adult, both in value as well as growth terms. The country’s adult population saw their average share of the country’s wealth increase from $2,035 (the total value of their financial and non-financial assets minus their debts) in 2000 to $4,645 in 2014. This was just a 128 per cent rise. In comparison, the average Chinese adult saw his wealth grow by 376 per cent from $5,673 to $21,331 during the corresponding period, while the average Brazilian saw his wealth grow by 296.9 per cent to $23,415 — the highest for any BRICS member.

South Africa, with the highest per capita adult wealth of $8,433 in 2000, could only manage to grow it by 261.7 per cent to $22,073 per adult by 2014. Russia, which managed to increase per capita adult wealth from just $2,917 in 2000 to $21,488 by 2012, saw the average wealth per adult slip below the $20,000-mark in 2014. In this regard, the growth rate achieved by Russia, at 671.5 per cent, was the fastest again in the grouping.

Growing inequality

In India, with an adult population of 776 million, 94.5 per cent fall into the bracket of people with less than $10,000 of wealth. Of the remaining adult population, the top 5 per cent accounts for a staggering 38.3 per cent of the country’s total wealth.

Of this, just 0.3 per cent fits into the category of people with wealth over $1,00,000 and the millionaire and billionaire population make up far less than 0.1 per cent of the population.

There are 1,81,987 millionaires in the country and 51 billionaires. The wealth distribution is a bit more equitable in other BRICS countries.

In China, for example, 62.3 per cent of the population has less than $10,000 of wealth, while 35.4 per cent is in the $10,000-1,00,000 pool. What’s more, 2.2 per cent of the one-billion-plus adult population has wealth of $1,00,000-10,00,000 and over 0.1 per cent has over a million dollars of wealth stashed away. Despite this, it is pertinent to note that China has less billionaires than India, at just 25. The number of millionaires also dwarfs the Indian club, at over 1.1 million members.

Brazil and South Africa have also managed to reduce the segment of the population that has less than $10,000 of wealth to less than 70 per cent of their populations. Thirty per cent and 28 per cent of their population respectively are in the $10,000-$1,00,000 wealth bracket and 2.7 per cent of the population in Brazil and 3 per cent in South Africa have wealth of over $1,00,000. Brazil’s billionaire population is the same as India’s, while South Africa has just six.

Russia, on the other hand, clearly faces similar challenges as India, with 83.3 per cent of its population having less than $10,000 of wealth to their name. That’s despite the fact that the country has 125 billionaires residing in the country.

Published on April 19, 2015

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