India’s wealth pyramid tapers much too sharply
Hurun’s report shows a high concentration of our wealth. Prosperity is welcome, but we have multitudes in need of health and education. Our economy must avert a middle-income trap
India’s much-vaunted middle-class has played a major role in attracting foreign investment, but just how large are the well-off cohorts at the upper reaches of our socio-economic pyramid? Wealth data is far harder to obtain and ascertain than income figures, and so any stratification drawn from a survey-backed study evokes high levels of interest. The latest estimates we have are from the Hurun India Wealth Report 2020, which offers us a rather finely sliced view of the country’s well-off and well-heeled. Right on top are the households of dollar billionaires, of which we now have some 200, by Hurun’s count. The next bracket, of those with wealth placed at ₹1,000 crore or more, has about 3,000 households. Then we have the report’s ‘international’ ultra high net worth individuals (UHNIs) with household wealth of at least ₹200 crore, about 13,000 of them, followed by 23,000 UHNIs with wealth of ₹100 crore-plus. Regular HNIs, or those with ₹10 crore and above, add up to 294,000 households, while the tally of the ‘affluent’, or dollar-millionaire households with at least ₹7 crore, stands at 412,000. A strata below them, we have what Hurun terms the ‘new middle class’, which has 633,000 households with earnings every year of ₹50 lakh or more but insufficient wealth to make the affluence cut. The general middle-class, under this classification, comprise Indian homes that earn more than ₹2.5 lakh annually but do not qualify for other slabs. We have 56.4 million such households.
The most striking aspect of this pyramid is how sharply it tapers towards its apex. Wide variations of lifestyle have been a matter of common observation, but Hurun’s report also points out significant differences in the investment outlook of different strata. Owners of businesses—be it billionaires, UHNIs or even the affluent—invest much of their money in business expansion. What marks our higher brackets out is that, typically, most of their wealth is held in the form of equity stock. For salaried households, even those with fat pay packets, home ownership is still a very big deal as far as ‘assets’ go, with share purchases largely a secondary pursuit. Property is especially favoured by our ‘new middle-class’, which seems to consider it a key provider of comfort as much as a prominent symbol of status. All in all, the report confirms a classic divergence between the bulk of us who work for money and the few who make money work for them.
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Assuming five members per household, Hurun’s report covers roughly 288 million Indians who are either wealthy or middle-class. While this may suffice to keep our consumer economy ticking, we also have about a billion citizens at the bulky base of our pyramid who need to move up over the next few decades. If they suffer stagnancy, our economy would risk slipping at some point ahead into a ‘middle-income trap’, characterized by a slowdown, as the relatively satiated see their consumption flag (as a proportion of earnings) and domestic markets for products and services run into early maturity. Recent solutions of policy have involved a push for such basics as hygiene, apart from electricity, water and gas supply. Also, internet coverage. Good. Yet, what we need is a dramatic educational and health-care outreach over this decade. Telecom connectivity could allow online learning at a scale no country has ever seen. But a health insurance scheme for our multitudes cannot replace the need for actual medical support on the ground. Let’s double down on this, and make it the lasting legacy of our covid crisis.
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