India’s growth story reflects an overall upward trend in wealth during the 21st century, despite a setback in 2008 due to the global financial crisis and bumps caused by currency fluctuations. The annual growth of wealth per adult averaged 8% during 2000-2018. After falling by 26% in 2008, it rebounded and grew at an average rate of 7% up to 2018. After a year of slow growth, the wealth per adult in India is estimated at USD 7,020 in mid-2018, due to an exchange rate drop of 6%.
The financial assets recovered from the 2008 financial crisis and have continued to contribute substantially to the growth of household wealth, by accounting for 41% of the increase in the gross wealth worldwide. Two-thirds of this rise occurred in North America. The non-financial assets have grown at a faster rate in recent years and have provided the impetus to overall growth in all the regions, except North America, in the past year. This has accounted for over 75% of the rise in Europe and China, and all of the rise in India.
North America added USD 6.5 trillion to its stock of household wealth, out of which USD 6.3 trillion was added in the US. Europe’s contribution was an addition of USD 4.4 trillion, China’s was USD 2.3 trillion and Asia-Pacific’s (excluding India and China) was almost USD 1 trillion. However, India, Africa and Latin America saw a combined net loss. The 6,5% loss in Latin America, in part due to the economic troubles of Brazil and Argentina as well as the adverse currency movements, exceeded the percentage gains in China, Europe or North America. However, in considering smoothed exchange rates, the growth of wealth was positive in Latin America and slightly higher in India and Africa.
The biggest gains and losses can be attributed to exchange-rate movements. These have been relatively stable over the past year, in comparison with its recent history. Amongst the G7 countries, India and China, the changes in exchange-rate versus the US dollar did not exceed 3%, apart from the 6% depreciation in India and Russia.
As is typical of developing countries, personal wealth in India is dominated by property and other real assets, comprising 91% of estimated household assets. Household debt has risen at an overall rate of 7.1% with an increase in all regions except Africa, and double-digit growth in China and India. However, personal debts constitute only USD 840 or 11% of the gross assets, even after making adjustments for under-reporting. This implies that while indebtedness is a severe problem for many poor people in India, the overall household debt as a proportion of assets in India is lower than in most developed countries.
The results of the Credit Suisse Global Wealth Report reiterates the unequal growth of wealth in India. Not everybody has been able to achieve a share of the rising wealth in the country. The considerable wealth poverty is reflected in the fact that 91% of the adult population has wealth below USD 10,000. At the other extreme, a small fraction of the population (0.6% of adults) has a net worth over USD 100,000. However, owing to India’s large population, this translates into 4.8 million people. Also, the country has 404,000 adults in the top 1% of global wealth holders (share of 0.8%), 3,400 adults have wealth over USD 50 million and 1,500 have more than USD 100 million.
India Outbound
November 6, 2018
source https://indiaoutbound.org/indias-growth-in-wealth-relative-to-the-world/
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