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REVEALED: How Indians are making money

Last updated on: December 16, 2011 10:06 IST

REVEALED: How Indians are making money

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Individual wealth of Indians is expected to triple by financial year 2016 to Rs 249 lakh crore (Rs 249 trillion), according to Karvy Private Wealth.

Individual wealth has grown from Rs 73 lakh crore (Rs 73 trillion) last year to Rs 86.5 lakh crore (Rs 86.5 trillion) at present, the wealth management arm of Hyderabad-based Karvy Group said in the India wealth report.

The wealth of individuals has grown 18 per cent, as compared to a mere 9.7 per cent for global high net-worth individuals in the last year, it said.

The report studied patterns of individual investments across financial asset classes, excluding physical assets like gold and real estate.

Fixed deposits and bonds have become the top contributor to overall wealth held by individuals in India, replacing the last year's topper, direct equity, primarily due to the uncertainty in the financial markets, the report said.

"We have added as much wealth in the last five years as we have done in the first 50 years post-Independence," said Sunil Mishra, CEO, Karvy Private Wealth.

With the wealth of Indians expected to boom in the coming years, let us have a more detailed look at the India wealth report.

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Image: The Bombay Stock Exchange building in Mumbai.
Photographs: Reuters

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Asset-wise individual wealth in India

Fixed deposits and bonds: Rs 26,66,878 crore (Rs 26.668 trillion)

Proportion: 30.95 per cent

Direct equity: Rs 25,76,317 crore (Rs 25.763 trillion)

Proportion: 29.78 per cent

Insurance: Rs 15,25,735 crore (Rs 15.257 trillion)

Proportion: 17.64

Savings deposits: Rs 6,16,917 crore

Proportion: 7.13 per cent

Small savings: Rs 5,23,908 crore (Rs 6.169 trillion)

Proportion: 6.06 per cent

Provident fund: Rs 4,11,901 crore (Rs 4.119 trillion)

Proportion: 4.76 per cent

Mutual funds: Rs 2,88,543 crore (Rs 2.885 trillion)

Proportion: 3.34 per cent

Alternative assets: Rs 29,565 crore (Rs 295.65 billion)

Proportion: 0.34 per cent

Note: The data is based on only financial assets and not physical assets like real estate and gold. The total wealth in India held by individuals is estimated to be Rs 86.5 lakh crore (Rs 86.5 trillion).

Individual wealth does not include government and institutional holdings.

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Asset class-wise individual wealth in India

Equity: Rs 27,49,569 crore (Rs 27.495 trillion)

Proportion: 31.79

Debt: Rs 58,70,630 crore (Rs 58.706 trillion)

Proportion: 67.87 per cent

Alternative assets: Rs 29,565 crore (Rs 295.65 billion)

Proportion: 0.34 per cent

The data highlights the risk-averse nature of Indian individuals. Investments in debt instruments form a major part of the total individual wealth, with nearly 68 per cent parked in this asset class.

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Asset class-wise classification of global wealth

Equity: $14.09 trillion

Proportion: 40.7 per cent

Debt: $18.36 trillion

Proportion: 53.1 per cent

Alternative assets: $2.14 trillion

Proportion: 6.2 per cent

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Direct equity classification

Investor: Promoter holdings

Market capitalization: 32.92 per cent

Amount: Rs 22,06,501 crore

Investor: Institutions

Market capitalization: 47.95 per cent

Amount: Rs 32,13,904 crore

Investor: Retail investors

Market capitalization: 19.13 per cent

Amount: Rs 12,82,210 crore

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Mutual funds - individual wealth based on underlying investment

Asset class: Equity

Amount: Rs 1,73,252 crore (Rs 1.73 trillion)

Asset class: Debt

Amount: Rs 1,15,291 crore (Rs 1.152 trillion)

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Fixed deposits and bonds - individual wealth

Asset: Fixed deposits

Amount: Rs 26,70,008 crore (Rs 26.700 trillion)

Asset class: Bonds

Amount: Rs 6,870 crore (Rs 68.7 billion)

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Fixed deposits - individual wealth

Fixed deposit type: Bank FDs

Amount: Rs 25,71,873 crore (Rs 25.718 trillion)

Fixed deposit type: Corporate FDs

Amount: Rs 73,488 crore (Rs 734.88 billion)

Fixed deposit type: NBFC FDs

Amount: Rs 3,367 crore (Rs 33.67 billion)

Fixed deposit type: RNBC FDs

Amount: Rs 21,280 crore (Rs 212.8 billion)

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Bonds - individual wealth

Bond type: PSU bonds

Amount: Rs 2,445 crore (Rs 24.45 billion)

Bond type: Corporate bonds

Amount: Rs 4,425 crore (Rs 44.25 billion)

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Savings bank deposits - individual wealth

Bank: Commercial banks

Amount: Rs 6,02,610 crore (Rs 6.026 trillion)

Bank: Co-operative banks

Amount: Rs 14,307 (Rs 143.07 billion)

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Provident fund - individual wealth

Provident fund type: EPF

Amount: Rs 2,95,651 (Rs 2.956 trillion)

Provident fund type: PPF with banks

Amount: Rs 90,374 crore (Rs 903.74 trillion)

Provident fund type: PPF with post offices

Amount: Rs 25,876 crore (Rs 258.76 billion)

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Alternative assets - individual wealth

Asset type: Structured products

Amount: Rs 21,387 crore (Rs 213.87 billion)

Asset type: Private equity

Amount: Rs 2,970 crore (Rs 29.7 billion)

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Asset type: Gold ETFs

Amount: Rs 2,447 crore (Rs 24.47 billion)

Asset type: Real estate funds

Amount: Rs 2,044 crore (Rs 20.44 billion)

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Asset type: Film funds

Amount: Rs 453 crore (Rs 4.53 billion)

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Asset type: Art funds

Amount: Rs 264 crore (Rs 2.64 billion)

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Individual wealth - India versus global based on asset class

Name of asset: Equities

Global wealth: 40.7 per cent

Indian wealth: 31.80 per cent

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Name of asset: Debt

Global wealth: 53.1 per cent

Indian wealth: 67.86 per cent

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Name of asset: Alternative assets

Global wealth: 6.2 per cent

Indian wealth: 0.34 per cent

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Key trends

i) Total individual wealth in India is expected to nearly triple to Rs 249 lakh crore (Rs 250 trillion) by financial year 2016 from the current Rs 86.5 lakh crore (Rs 86.5 billion).

ii) Fixed deposits have regained popularity in financial year 2011 to become the single-largest investment class.

These instruments are expected to continue to be the largest and preferred investment class, at least in the next couple of years.

iii) Indian companies are becoming more mature and with increasingly greater numbers getting listed.

Individual wealth in equities is expected to reach 37 per cent in India in financial year 2016 against 30 per cent in financial year 2011.

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iv) As retirement benefits become more limited for the newer generation of government employees, they will begin to increasingly focus on retirement planning.

As awareness increases, more investments will be channelized into pension funds and retirement benefits.

v) Alternative assets, including structured products, private equity and venture capital funds, gold ETFs and reality, film and art funds, are expected to grow at a rapid pace of 100 per cent.

vi) Although the average investment size is larger, structured products and high yield debt will remain popular among high net-worth individuals as these are relatively safe in principal protection.


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