The economic growth rates in India may be slowing, but if recent research is to be believed, there is no downturn for the very wealthy in the country.
A report released this week by the wealth management division of Kotak Group, a financial services company, and Crisil, a research agency, suggested the overall fortunes of ultra-high net worth households in India would increase five-fold by 2016/2017 – from the current 65 trillion Indian rupees (€950 billion) to 318 trillion Indian rupees.
This would be largely driven by a rise in the number of wealthy people and an increase in the returns on their fortunes.
The report, which analysed responses from around 150 UHNW individuals – defined as those with a minimum average net worth of at least 250 million Indian rupees – found most rich considered it “unthinkable to curtail their spending or change their lifestyle”.
In fact, when asked if their way of living had suffered alongside the dip in economic growth in India, a quarter of respondents said: “Downturn? What downturn!”
Professionally employed individuals were found to “splurge” the most rather than wealth inheritors or self-made entrepreneurs. A “significant portion of overall expenditure” was on branded products, holidays, luxury watches, jewellery, diamonds and precious stones, and household electronics.
Interestingly, as more luxury companies such as family-controlled LVMH and Hermes set up stores in India, wealthy Indians were opting to shop more in the country rather than abroad, said the report. Luxury cars were also not overlooked – BMW, Audi and Mercedes were the top three car brands the rich wanted to buy.
The country’s economic climate had also not dampened travelling plans for the wealthy, with almost 80% of the respondents saying there was no impact on their vacation plans – Europe, New Zealand, Australia and South Africa were named as favourite holiday destinations.
But despite increases in wealth and spending, the amount given to philanthropy saw a decline – in 2010, the rich gave more than 6% of their income to charity, which fell to 4.4% last year.
The report, called Top of the Pyramid, found the main sources of the respondents' wealth to be real estate, investment in equity, or their own businesses.