Investment banking firm CLSA Asia-Pacific Markets has predicted that the number of millionaires in India — that is, people having minimum $1 million (about Rs 4.5 crore) of investible assets, excluding their first homes — will more than double by the year 2015. Apparently, there were 1.73 lakh millionaires in India in 2010, and that figure will grow to 4.03 lakh. Their total wealth will also more than double, to $2.5 trillion (more than Rs 1,00,00,000 crore, that’s Rs 100 lakh crore).
I have to admit that the figures look rather too optimistic to me.
And if they turn out to be true, we are looking at a potentially much larger gap between the haves and the have-nots, a much more inequitable economy.
Why don’t I trust this prediction? Well, because I can find little to cheer about as I look around. The overall mood is certainly much darker than it was even a year ago. Right now, we look like a downbeat nation, at every level of the pyramid, and mass psychology affects economies far more than econometric models would ever admit. While the man on the street is seeing his real income diminish, the fact that Indian businessmen today increasingly prefer to invest abroad rather than in India is old news by now. The fundamental reason for the all-around gloom is also obvious: our government seems to be in a state of paralysis. And the problem starts right from the top.
We have a Prime Minister who has been missing in action for quite some time now. When he speaks — which itself is a rare occurrence — it’s in cringe-inducing non sequiturs: corruption is bad, a terror attack is a “cowardly act”. He has presided over a total policy stasis — nothing has happened in critical areas like improving infrastructure, labour law reform, establishment of the GST, lowering customs duties further, and so on. And it would be stupid to expect any movement on anything even vaguely resembling economic reforms in the two and half years left before the next general elections.
The only action taking place seems to be at the RBI, which keeps hiking interest rates. This has had hardly any effect on inflation, since the rise in commodity prices is a global phenomenon, and we have little control over them. Instead, what the RBI is making sure is that money is dearer for both businesses and people, thus disincentivising investment, and hurting growth. It’s difficult to believe that the RBI’s all-out — though futile — war on inflation is not due to some desperate prodding from the government. After all, the UPA has hardly anything to showcase, and prices are the most important electoral issue in India.
There could have been a ray of hope if there was an effective Opposition. But the BJP continues to be in headless-chicken mode, confused, unsure and full of empty bluster. I mean, the brightest idea these guys could come up with in the current situation is hoisting the octogenarian Advani onto another rath and sending him round the country! Does one need to say anything more?
India’s mood today is a curious mixture of fatigue, cynicism and anger. In this scenario, if a lot of people are suddenly going to become millionaires, it cannot be through ways that will help the economy in any real sense. In other words, in the unlikely case that CLSA’s prediction comes true, the lives of a billion people will remain unaffected.