Tuesday, December 06, 2016

India's total wealth declined by 0.8% in 2015-16: Credit Suisse research

By Our Representative
Government of India may claim that the country’s gross national product (GDP) during 2015-16 grew by 7.56%, one of the highest in the world. However, Credit Suisse, a Switzerland-based multinational financial services group, has said that, in real terms, there was a decline of 0.8% in the country’s total wealth in 2015-16.
Estimating total wealth of India at $3,099 billion in 2016, the MNC in its Global Wealth Report 2016, brought out by its research wing, says that in 2015-16 there was a downfall of $26 billion.
India’s fall in total wealth comes about amidst a rise of 1.4% globally, mainly on account of a whopping increase of 8.3% in the Asia-Pacific region and 2% in North America.
During the same period, the MNC research estimates, India’s wealth per adult went down by 2.8%, as against a decline of just 0.1% globally. India’s wealth per adult stood at $ 3,835 in 2015-16.
The report says, “The largest percentage rise (16%) in household debt per adult was recorded in India”, even as “residents of India remain heavily concentrated in the bottom half of the distribution, accounting for more than a quarter of the members.”
Pointing towards the country’s “high wealth inequality and immense population”, the report states, this means that India “also has a significant number of members in the top wealth echelons.”
Noting that globally “wealth growth has undeniably been on a declining path”, the report says, “In regions such as India and China, this is more evident, as wealth growth has more than halved compared to the previous five years.”
Suggesting that wealth in India is poorly distributed, the report says, “India accounts for just 3.1% of those with mid-range wealth, and that share has changed very little during the past decade. In contrast, China accounts for 33% of those with wealth between $10,000 and $100,000, ten times the number of Indians, and double the proportion of Chinese in 2000.”
If calculated “in terms of its own currency, India's wealth has grown quite quickly since the turn of the century, except during the global financial crisis”, the report says, “Annual growth of wealth per adult in rupees has averaged 6% over 2000-16.”
In dollar terms, the report states, “Prior to 2008, wealth also rose strongly in USD terms, from USD 2,040 in 2000 to USD 5,100 in 2007. After falling 26% in 2008, it rebounded, reaching USD 5,100 in 2010, but since then has fallen 25% due to currency depreciation. Wealth per adult has not regained its previous peak, and was just USD 3,840 in mid-2016.”
“Personal wealth in India is dominated by property and other real assets, which make up 86% of estimated household assets”, the report says, adding, “This is typical for developing countries.”
Interestingly, the report says, “Personal debts are estimated to be only USD 376, or just 9% of gross assets, even when adjustments are made for underreporting. Thus, although indebtedness is a severe problem for many poor people in India, overall household debt as a proportion of assets in India is lower than in most developed countries.”
Pointing towards “considerable wealth poverty” in India, the report says, this reflected in the fact that “96% of the adult population has wealth below USD 10,000. At the other extreme, a small fraction of the population (just 0.3% of adults) has a net worth over USD 100,000. However, due to India's large population, this translates into 2.4 million people.”
“The country has 248,000 adults in the top 1% of global wealth holders, which is a 0.5% share. By our estimates, 2,260 adults have wealth over USD 50 million, and 1,040 have more than USD 100 million”, the report says.

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