Mumbai: The downturn in the Indian economy has not spared the rich. Even so-called ultra high networth individuals (HNIs) have turned cautious and are postponing big-ticket purchases, according to ‘Top of the Pyramid,’ a report by Kotak Wealth Management and Crisil Research released on Tuesday.

The survey of 150 ultra HNIs, conducted between March and May, found that unlike in 2012, a large percentage of respondents are now saying that there is indeed a downturn this year and an early recovery is not in sight.

That has caused the rich to cut back on spending by 20-25%, hurting sectors like automobiles, other consumer durables and hospitality. They are also spending less on occasions like birthday parties and marriages. They still are spending on clothes and accessories and are not cutting back on non-discretionary spending.

In the past year, discretionary spending, or expenditure on items that go beyond daily essentials, as a proportion of total spending fell to 33.2% from 41.2% in the previous year ago.

An ultra HNI is defined as an individual who has a networth upwards of Rs25 crore, and annual income of between Rs3.5 crore and Rs4 crore. Ultra HNIs are divided into three categories—wealth by inheritance, professionals and self-made individuals.

Although India’s economic growth slowed to a decade’s low of 5% in fiscal 2013, the number of ultra high networth households grew by about 24% to 100,900 in the last fiscal from 81,000 in the previous year, according to the report.

The number is expected to triple to around 329,000 over the next five years, it said.

Consequently, the net worth of ultra high networth households is estimated to surge 4.5 times from an estimated Rs86 trillion in 2012-13 to Rs380 trillion by 2017-18.

“The increase has come from new additions which have grown by 20-22% and also with existing investments of ultra HNIs growing by 34% over a year ago," said Manoj Mohta, director, Crisil Research.

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