According to the Karvy India Wealth Report released on Wednesday, individual wealth in India grew by 9.62% in FY 19 to ₹430 lakh crores. This represented a slowdown from the 13.45% growth reported in FY 18. The figure broadly mirrors nominal GDP growth (comprising of real GDP growth of 5-6% and inflation of 3-4%). Financial assets grew at 10.96% (down from 16.42% in FY 18) compared to a 7.59% growth registered by physical assets (down from 9.24% in FY 18). Over the past 4 years, individual wealth grew from ₹2.8 lakh crore to 4.30 lakh crore, a CAGR of 11%, once again mirroring growth of nominal GDP.
The report also noted the shift in the composition of savings towards financial assets. These have grown their share from 57.25% to 60.95% over the past 5 years accompanied by a corresponding reduction in the share of physical assets.
According to the report, direct equity is the biggest component of financial wealth. It accounts for a 19.88% share of financial assets. However much of this is a result of promoter shareholding in companies, clarified Abhijit Bhave, CEO of Karvy Private Wealth. This is followed by 17.48% in fixed deposits and bonds, 14.08% in insurance and 13.06% in savings deposits. Mutual Funds occupy only a 5.25% share in financial assets.
The report showed that cash occupies 7.84% share in individual financial wealth and registered a 16.62% growth in FY 19, faster than the growth in fixed deposits and savings bank deposits. However this growth was slower than the 31.79% growth is saw in FY 18, as Indian households restored their cash holdings post demonetization. On the physical asset side, real estate takes a 44.38% share and gold takes a 44.20% share.
The report also noted a scorching 31.17% growth in the international assets of Indians to ₹34,138 crore in FY 19. This continued a strong uptick in FY 18 at 25.84%. Indians are allowed to remit up to $250,000 per annum under the Liberalized Remittance Scheme (LRS) per year. According to the report, the bulk of this money was held in foreign equity and debt (21,912 crore), followed by deposits (10,745 crores) and fund of funds (1,481 crore).