Sunday, September 24, 2006

Indian Growth Story

India has emerged as the world's fastest growing wealth creator, thanks to a buoyant stock market and higher earnings.

More wealth also means more millionaires, whose number has grown over 15% between 2000 and 2005, keeping pace with China. And the boom is set to continue in the foreseeable future, with predictions that Indians will grow richer at a rate faster than anybody else on the planet over the next few years.

Boston Consulting Group's just released Global Wealth 2006 study shows that during 2005, the high growth in India's (15.9% in local currency terms, compared with China's 14.8%) assets under management (AUM) — comprising cash, shares, assets in the country and overases and money market funds — has helped raise the global bar and more than make up for the loss in AUM in the United States, the world's wealthiest nation with $31 trillion.

The calculation excludes wealth attributed to investors' own businesses, residences or luxury goods.

On the flip side, it is the super rich in India and China who have benefitted more from the boom than their slightly less wealthy counterparts, the report says.

The steady growth, estimated at nearly 16% in 2000-2005, has meant that India's AUM has more than doubled from $268 billion to $559 billion, helping it move up the ladder from the 27th place to number 19 during the five-year period.While growth rate is projected to taper off a little — to 13.3% between now and 2010 — India is seen to be the fastest growing member of the BRIC (Brazil, Russia, India, China) club — which, the report says, will grow twice as fast as the international average. Wealth in BRIC is projected to grow at 10.6% during the year period ending 2010, while the global rate will be 5.6%.

The report also says that India will join the $1 trillion wealth club by 2010, accounting for 1% of the global pie of $115.8 trillion in 2010.

So, where is the growth going to come from? The answer is infotech (IT), pharma and textiles. With more wealth, the investment pattern too is expected to change from predominantly cash deposits (which constitute over 60% of the AUM in India, China and Korea) to equities and more sophisticated instruments.

In 2000, China and Brazil were the only BRIC countries whose wealth markets were among 20 largest in the world. By 2005, China had moved from 12th place into top 10, Brazil had advanced from 18th to 14th and Russia and India had entered top 20. The report says BRIC countries have made gains in the number of millionaires.

Growth rates of millionaire households in India and China have been among highest in world, averaging more than 15% per year from 2000 through 2005. Thanks TOI

As usual riches become more richer and Poor become poorer, wealth is spread only with few states and few cities of India

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