June 15: India may have only 61,000 millionaires and the US 2.27 million, but it’s creating millionaires at a more rapid pace than, well, almost any other nation.
That includes China, a nation experts never tire of citing in any comparison — higher growth, higher foreign investment and even a greater number of millionaires. Though China had four times as many millionaires as India at 236,000, their ranks grew by only 12 per cent between the end of 2002 and the close of 2003.
Who would say India’s not shining' The number of high net worth individuals in the country swelled by 22 per cent in the period.
According to a survey by investment bank Merrill Lynch and technology consultancy Capgemini, there were an estimated 7.7 million millionaires in the world at the end of 2003, half a million more than at the end of 2002.
These wealthy individuals saw their riches increase by 7.7 per cent to $28.8 trillion in 2003, recovering to levels seen before the global recession took hold in 2001. And the rich are set to get richer, with their wealth forecast to grow by 7 per cent a year and to exceed $40.7 trillion by 2008.
The survey covers individuals with financial assets of at least $1 million (around Rs 4.5 crore), excluding the value of their homes.
It is not known what a political party would have done with the swelling body of millionaires had the figure become known before the elections, but after — with India Shining turning into a pariah phrase — it will possibly be only talked about in hushed tones at least in the corridors of power.
So how did India create all these new millionaires' “They benefited from a strong stock market rally and solid, global economic growth. In particular, wealthy investors in the US, China and India were able to capitalise on these trends,” Merrill Lynch said.
The US led the field in terms of wealth creation, with the number of millionaires rising by 14 per cent to 2.27 million, the largest gain in actual numbers for any country.
Europe showed a more modest increase, with the number of millionaires up 2.4 per cent to 2.6 million.
“That partly can be attributed to the more restrictive European income-tax policies which impeded personal wealth accumulation,” the report said.
The survey also highlighted a small, but fast-growing global group of 70,000 super-rich individuals with more than $30 million in financial assets. It found that this group was growing at a faster pace than those in the $1 million-plus bracket.
As stock markets revived last year, the wealthy were quick to shift their money back into higher yielding investments, particularly equities.
Money invested in equities increased to 35 per cent of the total assets of these high net worth individuals in 2003 from 20 per cent in 2002.
Capgemini said there had been a move away from a very conservative investment stance towards “cautious bullishness”. Wealth preservation, the motto during the market downturn, is out. Accumulation is in.
The wealthy are following a structured process, looking for integrated investment solutions rather than making isolated purchases. This has taken the “emotion out of investing”, Capgemini said.
The focus is on long-term growth. And the wealthy are really thinking long.
“Many ultra-wealthy families are creating 100-year plans, in which family members are treated as business divisions,” said a Capgemini official.
But most of all, according to Merrill Lynch, “high net worth individuals seem to have gotten it right last year”.
Don’t they, always'