India's millionaire population crosses 1 lakh mark

NEW DELHI: Riding high on strong economic growth and robust gains in stock markets, the number of millionaires in India has crossed one lakh mark -- emerging as the world's second fastest growing nation after Singapore.

The number of high net worth individuals (HNWI), with a net asset of atleast one million dollar, increased by 20.5 per cent to 1,00,015 in India last year, second only after 21.2 per cent growth in Singapore, according to the World Wealth Report released by Merrill Lynch and Cap Gemini on Thursday.

Besides India, countries like Australia, Brazil, Canada, China, Germany, Russia, UK and the US also have more than one lakh people with at least one million dollars in net assets, excluding their primary residence and consumables.

The number of Indian millionaires stood at about 83,000 in 2005.

The worldwide population of HNWIs increased by 8.3 per cent to 9.5 million, while their collective wealth rose by 11.4 per cent to 37.2 trillion dollars in 2006, it says.

While attributing the wealth generation to gains in GDP and continued market capitalisation growth across the world, Merrill Lynch and Capgemini predicted the overall HNWI financial wealth to grow to 51.6 trillion dollars by 2011 at an annual rate of 6.8 per cent.

Driven by strong gains in countries like India, Singapore and China, the HNWIs' combined wealth in Asia increased by 10.5 per cent to 8.4 trillion dollars.

"Asia was also home to some of the fastest growing markets in terms of HNWI population, occupying five out of the top 10 spots globally," the report said.

"Strong economic growth and a robust performance in many of the region's stock markets worked together during 2006 to drive wealth creation in the Asia Pacific," DSP Merrill Lynch's Global Private Client Managing Director Pradeep Dokania said.

"The region continued to benefit from the combined effects of strong underlying fundamentals and incremental portfolio and direct investment into Asian economies," he added.

China, with GDP growth of 10.5 per cent in 2006, saw a 7.8 per cent increase in HNWIs to 3,45,000, from 3,20,000 a year ago.

While noting that the BRIC nations (Brazil, Russia, India and China) were playing increasingly important roles in the global economy, the report said that two of these four countries made their way into the list of the 10 fastest growing HNWI populations in 2006.

Among several events contributing to China's 2006 gains, the study named a flurry of IPO activity on the country's stock exchanges that raised 45 billion dollars in primary offerings, an amount second only to that raised in the UK.

Besides, China also converted two thirds of its non-tradable shares into tradable shares, creating liquidity in its markets.

The study said India also continued its strong expansion, with real GDP growth of 8.8 per cent in 2006, driven by increased private consumption 9.1 per cent in 2006, up from 6.6 per cent in 2005 and strong manufacturing and service sectors.

Manufacturing led the way with 11.9 per cent growth in 2006. Across the world, the North Americans further consolidated their top position in terms of both number of resident millionaires and the size of their accumulated wealth.

In the US, the HNWI population expanded by 9.4 per cent in 2006, up from 6.8 per cent in 2005, while compensating for a deceleration in HNWI growth in Canada, which fell from 7.2 per cent in 2005 to 6.9 per cent in 2006.

The HNWI population in the US grew to 2,920,000 in 2006, from 2,669,000 a year ago, while that in Canada increased to 2,48,000 from 2,32,000.

Globally HNWIs have been lured by the real estate with more people shifting their money into the sector. This trend was most dramatic in the Asia Pacific where a full 29 per cent of HNWI assets were held in real estate, up 16 per cent in 2005.