Around 5,000 super-rich left India in 2018

India witnessed the third largest outflow of high networth individuals (HNWIs) in the world in absolute terms, after China and Russian Federation, last year, according to a recent wealth migration report.

Around 5,000 Indian super-rich have migrated from the country during 2018, according to Global Wealth Migration Review 2019 (GWMR) published by the AfrAsia Bank and research firm New World Wealth. However, in percentage terms, only 2% of Indian HNWIs have migrated from India.

Percentage of HNWIs' refers to the outflow divided by the total number of HNWIs living in that country.

In absolute terms, the highest outflow was visible in China with 15,000 HNWIs, or 2% Chinese super-rich, left the country, followed by Russian Federation with 7,000, or 6% HNWIs outflow. Turkey witnessed the highest outflow at 10%, but in absolute terms 4,000 Turkish HNWIs migrated.

Around 48% of India's wealth is held by HNWIs in 2018 and was identified as the ninth among the top ten countries for HNWIs with 327,100 resident HNWIs. The country also lists among the top three countries in terms of resident billionaire with 118 billionaires, after the US (715 resident billionaires) and China (237 resident billionaires).

The reasons identified for HNWIs leaving the country are safety, especially of women and children; climate, pollution, space, nature and scenery; financial concerns; schooling and educational opportunities for their children; work and business opportunities; taxes; healthcare system; religious tension, standard of living and oppressive government.

However, according to the GWMR, the outflows of HNWIs from China and India are not particularly concerning as they are still producing far more new HNWIs than they are losing. Also, once the standard of living in these countries improves, several wealthy people are expected to move back.

“Notwithstanding this, the ongoing trade war between the US and China is a bit of a concern, especially as relates to the crackdown on Chinese hi-tech exports (i.e. Huawei). If this trade war continues, it could encourage more wealthy Chinese people to leave China,” the report added.

India will overtake Germany and the UK to become the fourth largest wealth markets in the world by 2028 with an estimated wealth growth of 180% to $22,814 billion from $8148 billion in 2018. Currently, it is the sixth largest wealth market globally. However, the country's wealth growth has marginally fallen 1% over 2017's wealth of $8230 billion.

The fastest growing wealth markets in India are expected to be driven by strong growth forecast in the local financial services, IT, business process outsourcing, real estate, healthcare and media sectors. Mumbai is currently the only Indian city among the top 20 cities worldwide in terms of total wealth held.

Total private wealth held worldwide amounts to approximately $204 trillion. The average individual has net assets of $27,100 (wealth per capita). There are approximately 14 million HNWIs (millionaires) in the world, each with net assets of $1 million or more. There are approximately 560,000 multi-millionaires in the world, each with net assets of $10 million or more. There are approximately 25,000 centi-millionaires in the world, each with net assets of $100 million or more. There are 2,140 billionaires in the world, each with net assets of $1 billion or more.

The publishers of the review, the AfrAsia Bank and New World Wealth, consider wealth to be a far better measure of the financial health of an economy than GDP because in many developing countries, a large portion of GDP flows to the government and therefore has little impact on private wealth creation. GDP counts items multiple times, disregards income levels in a country, ignores the efficiency of the local banking sector and the local stock market at retaining wealth in a country.

“GDP largely ignores the impact of property and stock market moves. These two factors obviously have a massive impact on wealth. GDP is quite a static measure – it tends to only moves lightly year on year. As a result, it is not a great gauge of the performance of an economy. Wealth figures, on the other hand, do not have any of these limitations, making them a far better gauge of the financial health of an economy than GDP figures,” the report.

The review said wealth migration figures are a very important gauge of the health of an economy. If a country is losing a large number of HNWIs to migration, it is probably due to serious problems in that country (i.e. crime, lack of business opportunities, religious tensions, etc). It can also be a sign of bad things to come as HNWIs are often the first people to leave – they have the means to leave unlike middle class citizens. If one looks at any major country collapse in history, it is normally preceded by a migration of wealthy people away from that country.

Conversely, countries that attract HNWIs (like Australia and the US) tend to be very healthy and normally have low crime rates, good schools and good business opportunities, it said.

GREENER PASTURES 

• Outflow of HNWIs from China and India are not particularly concerning as they are still producing far more new HNWIs than they are losing
   
• Once the standard of living in these countries improves, several wealthy people are expected to move back