Wealth creation slows down while debt levels increase: Credit Suisse

A recent study conducted by Credit Suisse revealed that wealth creation by Indian households had slowed down while debt has increased. 

The household wealth has grown by 5.2% in dollar terms for the period ended 30 June 2019. The net wealth per adult grew by 3.3%, down from the average growth rate of 11% recorded during 20 years till 2019. Earlier, Indian household wealth grew at a slower pace in FY 2017-18 at 2.6%. India has, however, outpaced the growth in any other region.

The gradual dip in wealth creation corresponds to the slow growth in the Indian economy. The GDP growth for April to June quarter of 5% was the slowest in 6 years. Private consumption for the same quarter grew at 3.1%, at an 18-quarter low.

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In FY 2018-19, the growth in the non-financial assets of Indian households stood at 6.9%, while the financial assets grew at 1.4%. The rise in the real estate prices contributed to the increase in household wealth in FY 2018-19. The asset prices grew at a slower pace of 6% in 2018-19. However, forex fluctuations contributed favourably to growth. 

The wealth per Indian stands at an estimate of USD 14,569 (Rs 10.31 lakh as on 21 October 2019). However, the average number skews in favour of a few wealthy individuals. About 78% of the population has wealth below USD 10,000, and 1.8% has wealth more than USD 100,000. 

At the end of the wealth, creators are 1,790 adults having wealth over USD 100 million. About 2% of the world’s millionaires are from India. 

In terms of assets, Indians hold an average of USD 13,000 in physical assets and roughly USD 3,000 in financial assets. The debt per adult stands at USD 1,345.

For any clarifications/feedback on the topic, please contact the writer at sweta.dugar@cleartax.in