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aIndian LL As February turned to March, I was transfixed by the spectacle of a pre-wedding celebration in Jamnagar, a not-so-glamorous industrial town in western India, for Anant Ambani, son of India's richest man, Mukesh Ambani, head of the mega-conglomerate Reliance. Bill Gates, Mark Zuckerberg, Rihanna and a host of Indian business tycoons, cricketing legends and Bollywood stars were in attendance. aThe government temporarily converted the local domestic airport into an international airport. tv setOn social media and in newspapers, the festival was portrayed as a symbol of the tastes and power of India's wealthy.
The Ambanis and their fellow billionaires are well known in India, but they do not represent the country's wealthy class, who are, almost by definition, a select few. ForbesAccording to , which compiles the list, India has just 186 billionaires. More influential and emblematic of India's economic situation is its growing legion of billionaires, who exercise outsized influence over consumption, investment and growth patterns relative to their numbers. They tend not to make much headlines or advertise their wealth.
There is no fixed definition of “wealthy” that can be used by companies catering to the wealthy. However, the general benchmark for being “wealthy” is having a net worth of more than $1 million, including the value of one's primary residence. This can inflate the figure if you count people who work for modest wages and inherit a big apartment on Mumbai's beachfront. $1 million can buy a 1,100-square-foot (100-square-meter) property in a prime location in the city. However, this figure does not include people with illicit cash holdings, making the actual figure lower. Experts speculate that these factors roughly cancel each other out to give a fair picture of the country's wealthy.
By this definition, India will have about 850,000 millionaires in 2022, 473,000 more than a decade ago, according to a study by Swiss bank Credit Suisse. Between 2012 and 2022, the number of millionaires grew at an annual rate of 8.5%, above average. GDP India's economy grew at 5.6%. The economy is now recovering even stronger. As a result, asset managers expect the number of billionaires to grow by 15-20% per year. These are the nouveau riche. No data set details the demographics of this group. But it is possible to draw broad trends from those who manage their wealth. One commonality emerges: India's nouveau riche are nothing like the nouveau riche of old.
First, investors are more widely dispersed. Indians no longer need to live in first-tier cities like Mumbai, Delhi or Bangalore to become millionaires. Jaideep Hansraj, who ran asset management at major bank Kotak Mahindra for 15 years and now heads the bank's securities business, says the surge in investors from smaller cities has been staggering. They're coming from “Indore, Bhopal, Lucknow, Kanpur, no, Bareilly. It just doesn't make sense,” he says, referring to the sort of cities that an earlier generation of bankers would have sneered at. HDFCThe company, India's largest bank by market capitalization, said it has seen investments of $500,000 come from places like Jorhat in Assam, which many Indians would struggle to locate on a map.
Driving this geographic dispersion of wealth has been India's improving infrastructure, which has lowered transportation costs and accelerated shipments of manufactured goods. That includes a massive expansion of air routes, widespread high-speed internet and investment incentives from state governments eager to get a slice of India's growing economy. Asset managers are also expanding their operations to serve clients wherever they are.
The second change is the average age of the wealthy. Whereas the average age of India's wealthy was once over 50, billionaires in their 40s and 30s are now commonplace. Some have benefited from government land acquisitions for infrastructure projects, reaping huge profits from previously unproductive land. Many are first-generation businessmen who make staples like wafers (potatoes, not silicon), clothes and poppadoms, or rebar and ball bearings, less glamorous but essential necessities of a growing economy. Most are salaried professionals with company stock options and prudent personal investments. They are first-generation billionaires with “strong middle-class values,” says Chesan Shenoy of Anand Rathi Wealth, which manages $6.6 billion for nearly 10,000 clients.
The third big change is how the emerging wealthy spend their wealth, both investing and spending. They are more attuned to capital markets than their parents' generation. “Previously, you could have one standard conversation with 90 percent of your clients,” says Nitin Chengappa, head of private banking at international bank Standard Chartered. “Now, diversification is key — it's not just mutual funds. It's private equity, philanthropy, venture capital, what can you do with public companies — diversification is key.” [companies]“What can private companies do?” The wealthy are still buying up lots of gold and villas in India and abroad, but they are also showing growing interest in the market and an appetite for risk.
That doesn't mean they're cutting back on spending. International travel is a common luxury, as are lavish weddings and luxury cars. (Mercedes-Benz expects India to rise from fifth to third place outside Germany in three years.) European luxury brands and hotels are increasingly common in Indian cities. Dior held its show in Mumbai last year, and the Swiss watch industry is set to have its best-ever year for exports to India in 2022. Tata, India's largest conglomerate, is seeing robust growth in its luxury and five-star hotel business, especially in smaller cities. It plans to open 25 hotels this year, many of them luxury properties. An international airport due to open in Mumbai next year will reserve a fifth of its parking spaces for private jets.
There are two risks to the growth of India's new wealthy. The first is political, regulatory and tax changes. Investment risk-taking and liberalisation of consumption stem from the confidence of the wealthy as they get richer. Political instability could lead to a retreat into safer investments and reduced spending. And while the wealthy are largely immune to domestic inflation, they are particularly sensitive to tax changes, particularly on income and spending on luxury items.
Another risk is that the wealthy may flee the country. Luxury immigration firm Henley & Partners estimates that 7,500 Indian billionaires will have emigrated in 2022. Many more are quietly buying second homes in Dubai, London and Singapore, and also obtaining the right to emigrate as a way to broaden their options. Most want to send their children to university abroad. Professionals working for international companies are also highly mobile, attracted by a higher quality of life, better education for their children and a cleaner environment.
India's nouveau riche, like the elites that came before them, are a patriotic lot. Many are eager to give back and help improve the lives of other Indians, while also having a good time. But even as they change, they want India to change too. As one banker puts it, “No matter how rich you get, you can't do anything about pollution.” ■
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