CHENNAI: With a vast swathe of the informal economy coming under the formal on the back of the government’s push for reforms such as GST rollout, RERA and the new Insolvency and Bankruptcy Code, there has been a quantum jump in individual wealth, says a new study.
According to Karvy’s India Wealth Report 2017, the total wealth held by individuals in India grew 11 per cent in FY17 to Rs 344 lakh crore.
The wealth held by Indian individuals in financial assets has seen a substantial rise in FY17 growing at the rate of 14.63 per cent to Rs 204 lakh crore, while wealth in physical assets stood at Rs 140 lakh crore.
This is a significant trend reversal from previous year when physical assets had an upper hand over financial assets in terms of growth rates.
While IPOs and equities are the flavour of this season, gold and real estate that comprise 91 per cent of physical wealth in India are growing at a slower pace. Over 66 per cent of individual wealth in financial assets was held in direct equity, fixed deposits, insurance and saving bank deposits in FY17.
Meanwhile, wealth in direct equity alone grew 26.8 per cent in FY17 against a 13.84 per cent fall in FY16. Direct equity now holds 18 per cent of total wealth pie of individual financial wealth in India.
“Equity has emerged as the favoured asset class in FY17 with individual investors cashing in on the current bull run of the equity markets. Going ahead, financial assets are likely to sustain their dominant position with direct equity to emerge as the biggest contributor of individual wealth,” said Abhijit Bhave, CEO of Karvy Private Wealth.
He added that wealth in real estate is likely to double to Rs 121 lakh crore over the next five years, up from the current Rs 60.25 lakh crore.
Wealth forecast
The overall individual wealth in India is likely to touch Rs 639 lakh crore over the next five years, growing at a compounded annual growth rate of 13.18%. Financial assets will constitute 63 per cent of the total individual assets pie by FY22.