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India’s individual wealth jumps to Rs86.5 lakh crore in FY10-11

The significant growth in FY10-11 was led by fixed deposits, insurance, equity and alternative assets. The estimate excludes wealth held by government and institutional holdings. Further, only financial assets have been taken into account and not physical assets such as real estate and gold, financial services provider Karvy said

New Delhi: Individual wealth of Indians surged by over 18% to Rs86.5 lakh crore in 2010-11 fiscal with fixed deposits and bonds accounting for nearly one-third of their total investments, reports PTI.

According to estimates from financial services provider Karvy, individual wealth is projected to nearly triple to Rs249 lakh crore by 2015-16.

“The total wealth in India held by individuals is estimated to be Rs86.5 lakh crore in FY10-11 (financial year ended March 2011),” Karvy said in a report released on Wednesday.

In the previous fiscal, the amount stood at Rs73 lakh crore.

The significant growth in FY10-11 was led by fixed deposits, insurance, equity and alternative assets.

Investments in fixed deposits and bonds accounted for Rs26,76,878 crore or about 31% of total amount.

The estimate excludes wealth held by government and institutional holdings. Further, only financial assets have been taken into account and not physical assets such as real estate and gold.

“... the wealth of India’s high networth individuals (HNIs) has grown by over 18% compared to a mere 9.7% for global HNIs in the last one year,” the report by Karvy Private Wealth—the wealth management arm of Karvy Group—said.

Against the backdrop of global economic uncertainties and high inflation in the country, many individual investors shifted towards safer investment avenues like fixed deposits, in FY10-11.

For the next couple of years, the report noted that fixed deposits are expected to remain the largest and preferred investment class.

“... despite formidable headwinds in recent years, including the 2008 global financial crisis, the subsequent Eurozone debt impact, and the persistently high inflation, India continues to be one of the fastest-growing nations in the world,” it said.

As per the report, with current annual household savings of about 34%, and expected to grow 8% on average, India is well poised to lead wealth creation in the global arena.

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Fight against inflation hurting corporate investment: FM

The finance minister’s comment assumes significance as all eyes are now on the RBI policy review which has hiked key rates 13 times since March 2010 in its bid to tame inflation, thereby making borrowings by corporates and other loans costlier

New Delhi: Ahead of the monetary policy review by the Reserve Bank of India (RBI) on Friday, finance minister Pranab Mukherjee on Wednesday said the fight against inflation is hurting the corporate investment, reports PTI.

The comment assumes significance as all eyes are now on the RBI policy review which has hiked key rates 13 times since March 2010 in its bid to tame inflation, thereby making borrowings by corporates and other loans costlier.

On slowdown in industrial growth, Mr Mukherjee told the Delhi Economics Conclave here that “this is partly a reflection of global trends, but our own fight against inflation has also taken a toll on investments by our corporations”.

“Sustained high inflation that has been a major policy concern for us over the past two years is now beginning to moderate... Growth, however, has slowed in 2011-12...We must turn our attention now to reviving growth as quickly as possible,” the finance minister added.

The RBI is scheduled to unveil the mid-quarter review of monetary policy on Friday.

India Inc has been complaining that the tight monetary policy stance of RBI is hurting investments. Industrial production contracted by 5.1% in October.

As the food inflation is on decline and the overall inflation too has eased marginally month-on-month, the industry has urged the RBI to soften its monetary stance.

On the falling value of rupee, he said, “While the Indian economy experienced excessive capital inflows in the aftermath of global crisis leading to appreciation of the domestic currency, with the unfolding of the Eurozone crisis, the matter of concern at present is reversal in such flows leading to increased currency volatility.”

The rupee yesterday touched a fresh all-time low of 53.71/72 against the US dollar.

Stressing that the Indian economy is, in some ways, better placed than many other nations, Mr Mukherjee said the country’s fiscal challenges in the form of public debt or size of fiscal deficit, are nowhere as large as the ones faced by many European nations.

“I say this not to encourage complacency in India but to place the issue in perspective. I am expecting that the present downturn will be temporary and our economy will soon revert back to high growth,” he said.

Last week, the government reduced the gross domestic product (GDP) forecast for the current fiscal to about 7.5% from the earlier projection of around 9%.

On the global scenario, he said the current build-up of concerns has been incremental in nature with a series of local intermittent shocks getting transferred to the world economy.

“All this has happened despite the aggressive use of both fiscal and monetary policy tools and our collective resolve to keep markets open. This poses some serious problems for the policy makers. Going forward it limits our options in dealing with emerging situation,” Mr Mukherjee said.

Expressing concerns that the even tepid economic recovery in advance economies is being stalled, Mr Mukherjee called for sound economic policies.

“While new opportunities await us in the near future, we must recognise that sound economic policy making is must for realising them,” Mr Mukherjee added.

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