The meltdown in global stock markets, real estate and commodity prices has ensured that there are now 332 fewer dollar billionaires in the world, according to Forbes, a US business magazine. The magazine has evocatively called this the billionaire bust. The number of Indian billionaires has more than halved, from 53 to 24. Some very big names have fallen off the list, as the billionaires of yesteryear are now mere millionaires.
There is a story behind these numbers. A lot of attention is usually paid to the number of billionaires a country boasts of—and in the case of developing countries such as ours, there is also the obvious question whether a rise in the number of billionaires is a true indication of the nation’s progress.
Illustration: Jayachandran / Mint
But there is as much to be learnt from the nature of super wealth in a country. Eye-popping wealth is generated in mature capitalist societies such as the US in competitive industries such as software, luxury brands, retailing or finance.
There is another group of countries where a form of crony capitalism reigns supreme. Here, wealth tends to grow from sectors that are either natural oligopolies or where entry is tightly controlled by corrupt governments. Fortunes are made in industries such as oil prospecting, real estate development, mining and telecom.
India unfortunately is closer to closer to crony capitalism than mature liberal capitalism. We are not as bad as Russia (where a lot of wealth was made in the wanton loot during the Boris Yelstin years) or parts of South America (where drug traffickers are among the wealthiest). India still has its old business families and its software billionaires, but many of those who shot to prominence during the recent economic boom have suffered.
The 29 Indians who have fallen off the Forbes list includes several big names. A large majority of them are in oligopolistic and tightly regulated industries such as real estate and airlines. Financial mismanagement has added to their woes, as several have more debt than their cash flows can realistically service.
But we do not think that the declining number of billionaires is reason to gloat. Many of the world’s super rich have been lucky to inherit great wealth. But many have grown what they were handed over by their parents. Many of the new entrants are entrepreneurs who took great risks and often enriched shareholders and employees in the process.
The current meltdown in asset prices could see the revival in interest in wealth creation the old-fashioned way—risk, innovation and excellence.
Visionaries or robber barons— how would you describe India’s super rich? Tell us at firstname.lastname@example.org