Hindustan Times (Lucknow)

India’s household wealth growth crawls to 5.2%

- Neil Borate neil.b@livemint.com

MUMBAI: Wealth creation in India slowed to a crawl in the year ended June 30 even as household debt jumped, a Credit Suisse study found.

India’s total household wealth grew by 5.2% in dollar terms in the period, the Credit Suisse Global Wealth Report released on Monday said. Net wealth per adult grew at 3.3%, sharply slower than the average 11% growth rate reported in the 20 years to 2019, the Credit Suisse Global Wealth Report released on Monday said.

India, however, remains one of the fastest wealth creators in the world, with household wealth in dollar terms growing faster than any other region. The slowdown in wealth creation coincides with a downturn in the Indian economy, which grew at the slowest pace in six years in the three months ended June 30. Growth in private consumptio­n expenditur­e also slumped to an 18-quarter low of 3.1% in the June quarter, indicating a negative wealth effect.

Overall, the Credit Suisse report found that non-financial assets of Indian households grew by 6.9% in 2018-19, outpacing the 1.4% growth in financial assets. The last time household wealth grew at a slower pace was in 2017-18, when it expanded 2.6%. But that was largely due to the sharp weakening of the rupee in that year—a 7-8% rise in asset values was offset by an almost 5% currency depreciati­on. In 2018-19, Indian asset prices grew at a slower pace of nearly 6% but foreign exchange fluctuatio­ns were more favourable. The report estimates wealth per Indian adult at $14,569 (₹10.31 lakh as on 21 October). However, the average number is skewed heavily by a few wealthy individual­s. The report estimates that 78% of India’s adult population has wealth below $10,000, while 1.8% of India’s population has more than $100,000.

At the other extreme, 1,790 adults have wealth over $100 million. India accounts for 2% of the world’s millionair­es.

Indians hold an average of about $13,000 in physical assets and roughly $3,000 in financial assets. There is also a debt of $1,345 per adult. The report also found that the increase in household wealth in India in 2018-19 was mostly driven by rising home prices.

THE INCREASE IN HOUSEHOLD WEALTH IN INDIA IN 2018-19 WAS MOSTLY DRIVEN BY RISING HOME PRICES

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