There has been much debate on how India’s rich keep getting richer while the poor become poorer with each passing year. However, enter 2011 and there seems to be an exception to the norm – India’s richest are getting poorer.
According to Forbes India Rich list, the wealth of India’s ‘who’s who’ has gone down from $300 billion in 2010 to $241 billion this year. Also, the country now has fewer billionaires –57 in all – compared to 69 last year.
Though Mukesh Ambani, chairman and managing director, Reliance Industries, maintained his numero uno position as India’s richest man for the fourth time in a row, his net worth has gone down from $27 billion in 2010 to $22.6 billion this year.
Interestingly, during this period the business magnate completed the construction of his 27-storey Antilia. It may be recalled that shares of RIL (Reliance Industries Limited) have taken a beating in the stock market despite the company posting healthy quarterly results.
“Indian share market is driven by sentiments. The company’s tiff with the government and its attempt to venture in new areas has affected its ability to raise market capital,” said an expert on condition of anonymity. Steel baron Lakshmi Mittal retained his number two slot, although even he saw his net worth dipping by $6.9 billion at $19.3 billion. However, Anil Ambani emerged the biggest loser. He slipped out of the India’s Top 10 richest list with a dip of $7.4 billion in his fortunes.
Experts attribute inflation, global slowdown and cross currency impact as the reasons for the decline in the net worth of India’s richest.
“With uncertainty in the environment and interest rates going up, India Inc is finding it difficult to raise capital,” said Sangeeta Lala, vice president, Teamlease, adding that “India as an economy is getting more and more transparent and open.”
“The rich have to declare every penny they earn. So, now the rich no longer look so rich,” she said. India has raised its interest rates 13 times in 19 months, making it more expensive for businesses to raise capital.
According to James Agrawal, consulting director and head, BTI Consultants India, Kelly, global slowdown is the main reason behind corporates losing a margin of their fortune.
“These companies do not restrict themselves to India. For instance, Lakshmi Mittal earns a majority of his income outside India. So, corruption, which is very India-centric, will not affect him as much as global slowdown,” said Agrawal.
However, many believe that the vulnerability in the Indian stock market has affected companies. “There has been a huge correction in the domestic stock market. In fact, it’s not an exaggeration to say that the scenario in Indian stock market is worse than what it is in Europe. Hence, companies increasingly find it difficult to raise money in the market,” said Sunil Goel, director GlobalHunt India, an executive recruitment firm.
This is the first time a woman made it to the list of India’s richest. At $9.5 billion, Savitri Jindal secured the fifth position. Of the 85 who made it again to the list, only 19 are better off. Dilip Shanghvi from Sun Pharmaceutical Industries and Hero Group
patriarch Brijmohan Lall Munjal were among the big gainers.