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Number of rich Indians up 12% but collective wealth is up only 5%: Report

Press Trust of India/ 14 Feb 18 | 07:44 AM

Amid concerns on inequality that has been on a steady climb across the globe in general and particularly in India, a study has said the number of the rich has grown at a faster clip than their collective networth in the country in 2017.

The number of ultra-high networth households in the country, which represents those with a networth of over Rs 250 million or more, has grown 12 per cent to over 16 million in 2017, while their collective networth grew only 5 per cent at Rs 153 trillion, said the study.

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Findings of the study, commissioned by Kotak Wealth Management, come even as there are increased concerns on rising inequality, especially after a 2017 paper by economists Thomas Piketty and Lucas Chancel, and also a report by the non-profit Oxfam ahead of the World Economic Forum earlier this year.

When asked about the divergence, Kotak's Wealth Management chief executive Jaideep Hansraj said their study had not gone into the inequality aspect.

"We've stuck to what we think where these set of ultra high networth households would grow to, will spend their monies and where are they growing, rather than us getting into those issues (of inequality)," he told reporters on Tuesday.

The study sees over the next five years, the number of such households will double to 33 million and their networth will grow to Rs 352 trillion.

He claimed that despite negative events like the note-ban which has pulled down GDP growth, one of the most important factors determining wealth for the category, its estimates have come out true in the last seven years since it has been coming out with the such reports.

Apart from GDP growth, the survey done by global consultancy EY uses data points on savings, and investments in asset classes like mutual funds, realty, gold and equities, and also bank deposit growth to come at its estimates, a senior official said.

Hansraj said events of the past fortnight in the equity markets have been "crazy" and added he expects a move to preferring the debt market investments over equities if this trend continues.

He, however, said there will not be a return to investing in physical assets like gold and real estate, and investing in financial assets, which got a fillip due to the note-ban, will continue.

An increasing number of the rich are adopting to "ad- hocism" as their investing is opportunity-driven, he said.

The survey says there is a trend of more wealthy people emerging from smaller cities, and expects this to continue.

Hansraj said investment in agriculture and infrastructure-linked sectors is a noticeable theme for 2018 which the company is witnessing.

Demonetisation helped the company's assets under management increase 55 per cent as a large amount of wealth got formalised, he said.

He said spends on philanthropy have been on the rise in the past few years, but declined to answer specifically whether this was due to rising inequality.

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