Despite a 30-place jump in World Bank’s Ease of Doing Business rankings, India is witnessing a lot of criticism from the domestic quarters over the state of the country’s economy.
A revamped GST might help arrest the slowdown in GDP in the past five quarters as it will encourage more spending, help the demand-supply cycle and leave the Indian pockets a little heavier because of tax cuts.
However, global investment bank Credit Suisse’s wealth report puts most claims by critics to test as it says that India’s wealth in 2016-2017 rose by 9.9 percent.
Just 10 years after recession hit global economies, India seems to have scaled the ranks quite high, and getting closer to the ranks of other leading economies such as Australia, Italy, France and Germany.
In India, market capitalisation rose by close to 30 percent, house prices by around 10 percent and the Indian rupee rose 4 percent against the US dollar, said the report.
Although India is quickly catching up, its projected income for 2022 still has a long way to go (Courtesy: Credit Suisse)
But there is a catch though: even if India got richer faster than many others and added a whopping USD 451 billion to its total wealth, it does not reflect on one key factor: income inequality.
The income disparity has also been pointed at in the Credit Suisse report: 92 percent of Indians have wealth less than USD 10,000 while 0.5 percent have a net worth of over USD 100,000, the report maintains.
“Residents of India remain heavily concentrated in the bottom half of the distribution, accounting for more than quarter of the members,” the report said.
As per the report, the fluctuation in asset prices and exchange rates account for a greater hike during the months.
The share of an Indian adult in the country’s total wealth rose 7.9 percent in the studied period to USD 5,796.
Yet this is just a fourth of what the our Chinese peers have thanks to unevenly distributed income in India.
India’s graph for increase in wealth over time. In USD (Courtesy: Credit Suisse)
As per the report, non-financial assets seems to be one of the main compositions of wealth – both in India and China as they accounted for more than 80 percent of the wealth of individuals of both the countries.
The average personal debt for an Indian adult is estimated at around USD 376, or just 9 percent of the gross assets, Credit Suisse said.
The Millionaires Club: Who’s ahead?
The Credit Suisse report also says that India is home to 2,45,000 millionaires. India also has about 346,000 adults in the global top 1 percent by wealth.
There are 1,820 adults in India who have wealth over USD 50 million. Credit Suisse forecasts the number of Indian millionaires to reach 3,72,000 in 2022.
India has a fair share of millionaires but is nowhere close to China (Courtesy: Credit Suisse)
China, in contrast, has close to 20 lakh millionaires and has more adults with wealth above USD 50 million than any other country except the US.
Although India has improved on a lot of fronts, but when it comes to household wealth, the gap with the developed economies is wide.
Income in North America is 50 times that of India, nine times that of China and four times of Europe.
About quadrupling of wealth in India between 2000 and 2017, the report says: “Despite this remarkable increase and having four times the population of the US, total wealth in India is comparable to the level of the US 90 years ago.”
Even if India’s wealth increases to USD 6 trillion by 2022 it will only be comparable to the wealth levels existent in the US of 1936, the report said.
(Currency figures are in 1 USD= Rs 65.34)
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