'Millionaires in India on the rise'

[sivaji]

 

Over the next decade, the number of dollar millionaires in India is expected to touch 4,11,000 from a negligible number currently.

According to a report by the Economist Intelligence Unit (EIU) on behalf of Barclays Wealth, these households are expected to be worth $1.7 trillion, or over the country's current market capitalization of about $1.3 trillion.

But as a percentage of the population these households will comprise just 0.2%. In comparison, smaller countries like Singapore and Hong Kong will have the highest concentration of millionaires with about 40% of the households in each country having wealth in excess of $1 million.

In absolute terms, however, India is projected to have one of the fastest-growing affluent markets in the world, making it the eighth largest wealth centre by 2017. The numbers of mass affluent, with wealth over $500,000, is expected to rise from a negligible figure in 2007 to 1.9 million by 2017.

The five-year bull run has contributed significantly to the rising fortunes, with many corporates and entrepreneurs tapping the markets to raise funds. Inherited wealth and rising corporate salaries are also key drivers.

As in many emerging markets, the wealthy in India have kept much of their wealth in tangible goods. Recent research by McKinsey reveals that Indian households hold over half their savings in physical assets like land, houses, cattle and gold.

Property accounts for 43% of overall household wealth. The yellow metal has also been a popular investment tool among Indians, who are the world's largest consumers of gold. Recent estimates suggest that the population owns $200 billion in gold, equal to nearly half of the country's bank deposits.

But over the next decade this might change, with the increasing popularity of financial instruments like REITs and real estate mutual funds as well as gold ETFs and bullion trading platforms. Investors are likely to shift to these avenues of holding traditional assets like property and gold.

''Composition of assets of wealthy Indians is increasingly shifting from physical assets to financial assets. We foresee a huge potential in the creation of financial assets, as real estate and gold still account for over half of household wealth in India,'' Barcalys Wealth India CEO Satya Bansal.