It expects the individual wealth in India to grow to Rs 558-lakh crore in 5 years
Total wealth held by individuals in India has grown 8.5% to Rs 304-lakh crore in FY16, according to Karvy’s India Wealth Report 2016. It expects the individual wealth in India to grow to Rs 558-lakh crore at a compounded annual growth rate (CAGR) of 12.9% over the next five years.
Total individual wealth in financial assets in India grew 7.14% to Rs 172-lakh crore in FY16, the report says, much slower than in FY15 when wealth had grown nearly 19%. The slower pace of growth has been attributed to the bleak performance of direct equities. Karvy expects financial assets to grow at a faster pace of 14.73% CAGR, nearly doubling in the next five years.
Growth in alternate asset classes in FY16 stood at 84.70% vis-à-vis FY15. Karvy predicts the growth to continue in the next five years although at a slightly slower pace. At the same time, Karvy also cautions against more ‘Black Swan’ events like demonetisation in the future, which will change the way Indians perceive wealth.
Going ahead, Karvy expects more wealth to enter the formal financial system given the government’s demonetisation programme. As a result, savings bank deposits, fixed deposits and small savings schemes to be most sought after investment avenues even for the next year.
Over the long-run, Karvy says, this wealth will eventually find its way into asset classes such as equities, mutual funds, etc. On the other hand, the proportion of investments in physical assets such as gold and real estate will reduce. Read more.
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