THE OLD: India has always had its share of the ultra rich such as the Nizam of Hyderabad (Photo courtesy Jewels of The Nizams)

In his 2007 book, Richistan: A Journey Through the American Wealth Boom and the Lives of the New Rich, Robert Frank, a senior writer at The Wall Street Journal, profiles what he calls “instapreneurs”, people who made their fortunes from businesses that range from ceramic lights to home-brewed shampoo to roofing supplies and mozzarella cheese.

Among the super rich, say authors Peter Bernstein and Annalyn Swan in All the Money in the World, 175 of the Forbes 400 — a listing of the world’s richest people — are “blue-collar billionaires”. And less than 10 per cent of today’s affluent owe their riches to inherited wealth, according to the Mendelsohn Affluent Survey. Mendelsohn Research is a New York-based market research and media research firm, whose 2007 survey was the 31st edition.

AND THE NEW: And today, people like Gateway DistriParks’ P.K. Gupta keep the track record going. (Pic by Sanjay Sakaria)

Growth And Stocks
The explosive growth of the global and Indian economies over the past five years (now derailed by the subprime credit crisis in the US and oil price inflation), greater international interest in India, a booming stockmarket and a rapidly expanding entrepreneurial class have all combined to create a larger number of rich and super rich people in India than at any other time in our short history as a nation.

The last time BW undertook this survey in September 2006, there were 74 new rupee billionaires (each worth in excess of Rs 100 crore); the list included those billionaires created during the course of one year ending 31 March 2006. This time there are 162 new ones; a caveat however. The new list has billionaires created over a two-year time-frame between March 2006 to March 2008.

In 2006, there were 32 dollar billionaires; in 2008 there are 54. The combined net worth of our 74 rupee billionaires in 2006 was Rs 76,959 crore. But that figure is skewed by one man’s — Tulsi Tanti of Suzlon Energy — wealth, who by himself accounted for Rs 27,104 crore, or nearly 30 per cent of total net worth of that group. Without Tanti, the total net worth of billionaires in 2006 was Rs 49,855 crore. There are 106 companies in this year’s sample, compared to 70 in 2006.

On 31 March this year, the markets were at about the same levels as they are now. All stockmarket indices — from narrow ones like the Bombay Stock Exchange (BSE) Sensitive Index (Sensex) and the National Stock Exchange’s (NSE) Nifty to the broader BSE 500 and the S&P CNX 500 — have returned 32 to 39 per cent between 31 March 2006 and 2008.

The net worth of the billionaires on our list has gone up 22 per cent (that number goes up to 88 per cent if we exclude Tulsi Tanti as an outlier from the 2006 list). The recent stockmarket correction may have diluted some of that ‘paper’ wealth that many of our billionaires still possess. But barring a catastrophe, none of them is likely to fall off the list; it’s more likely they will get richer.

The Rich And Super Rich
Some of them on our list are dollar billionaires already. What the IPO market did was bring that into the public domain. The Singh family of DLF, Anand Jain of Jai Corp and Sanjay Chandra of Unitech, for example, make it to both lists. Two rupee billionaires from our 2006 list — Jignesh Shah and Rakesh Jhunjhunwala — are now dollar billionaires, and on the Forbes list of the world’s richest people. There is much more wealth out there than is captured by the market capitalisation of our stock exchanges.

Land has always been a source of great wealth, but in the absence of a well functioning market for land, quantifying the wealth from land has been a problem. With so many real estate companies being listed — the component in the new list has grown from 4 companies to 22 — the explosion of riches was perhaps anticipated. Another trend emerges. That of rapidly growing urbanisation. It is likely that more new wealth is likely to be created in the coming years from land and real estate than from any other business or industry.

The other significant component of the list is financial services: from Rs 887 crore in combined net worth to Rs 9,013 crore in 2008, a 10-fold increase. This is testimony to growing faith in capital markets; ironic, since just over a decade ago, broking firms and market intermediaries were considered shady. Investments in these firms is the best sign of renewed belief.