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The Ranks Of Rich Swell In India

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The slowing economy seem to have had little impact on the wealth of the rich in India. In 2011, nearly 28,000 Indian households crossed the threshold to become millionaires ($1 million or Rs 5.5 crore at current prices) according to the Global Wealth Report 2012 of the Boston Consulting Group (BCG). With 1.62 lakh millionaire households (1.34 lakh in 2010), India is still at 13th place in the global ranking. 

"Global growth in private wealth is clearly being driven by rapidly developing economies in the 'new world,' not by the 'old world' of traditional, mature ones," the report said.

BCG estimates that private wealth in India and China will grow at compound annual growth rates of 19 per cent and 15 per cent, respectively, through 2016, compared with a global growth rate of 4 percent to 5 percent. More than a third of the global increase will come from China alone.

That puts pressure on wealth firms to increase their presence in these faster-growing markets, the consulting firm said.

Although the number of millionaire households fell by a combined 182,000 in the US and Japan last year, globally that number grew by 175,000, boosted by households in developing economies, particularly China and India.

"Because of the incredible growth Asia has seen, there has been a lag in terms of developing advisers," said Vish Jain, a Singapore-based partner at BCG. He added that a challenge to profitability for firms working in this region will be Asians' conservative tendency to keep their money in cash.

Despite the growth in developing economies, North America was still the wealthiest region globally in 2011, followed by Western Europe.

Looking at asset classes, equity markets suffered the most in 2011, with wealth held in stocks falling 3.4 per cent, while wealth in bonds - both corporate and government - climbed 3.3 percent. Wealth in cash and deposits grew 5.2 per cent.

"What happened in 2011 is you see once again a flight to liquidity," said Bruce Holley, a senior partner at BCG.

China's number should continue to grow, "driven by the large number of initial public offerings expected in the country, as well as by new wealth generated mainly by entrepreneurs," the report said.  

The US still had the largest number of millionaire households (51.34 lakh), followed by Japan (15.87 lakh) and China (14.32 lakh). 

According to the report, the growth of global private wealth slowed down to 1.9 per cent in 2011. The increase was considerably weaker than in the past two years. Global wealth grew by 9.6 per cent in 2009 and 6.8 per cent in 2010 but the euro zone crisis and a near default on US government debt in 2011 led to a sharp decline in global markets and private wealth during the year. 

Titled "The Battle to Regain Strength", the report says that global private wealth growth in 2011 was driven primarily by rapidly developing emerging economies. While the total private wealth increased by 18.5 per cent in the BRIC countries in 2011, it declined by 0.9 per cent in North America, 0.4 per cent in Western Europe and 2 per cent in Japan. In India, the number of millionaire households increased by 21%, from 1.34 lakh in 2010 to 1.62 lakh in 2011. 

Millionaire households The highest growth rate was in the $100 million-plus, ultra-high-net-worth (UHNW) segment, which saw its wealth rise by 3.6 per cent - compared with average growth of 1.7 per cent across all other segments. In 2011, only 278 Indian households figured in this segment, up from 241 in 2010. The US had the largest number of both UHNW and billionaire households in 2011 at 2,928 and 363, respectively. 

The equation is likely to change in the coming years. The BCG estimates that by 2016, the Asia-Pacific region (ex Japan) will be the second wealthiest in the world after North America. Europe, which used to be the wealthiest region in the world but was overtaken by North America last year, will get pushed down to third place. 

The report says that the highest density of millionaire households in 2011 was in Singapore-where more than 17 per cent of all households have private wealth of $1 million or higher-followed by Qatar (14.3 per cent), Kuwait (11.8 per cent), and Switzerland (9.5 per cent). 

(With Reuters)