Is e-commerce widening the wealth gap in India?

Average age of ultra high networth individuals (HNIs) in India is declining and nearly 50% of them are now less than 40 years, said a latest report. 

Kotak Wealth Management, a group of Kotak Mahindra, in its report titled 'Top of the Pyramid 2016' dated July 26 has said that surge in number of start-ups and  good performance of the Indian economy have resulted in rise in spends by ultra HNIs community in the fiscal year 2015-16 (FY16). 

As far as decline in the average age of ultra HNIs is concerned, it is primarily due to increase in younger age group coming into the category due to their higher disposable incomes which results in higher spending.  

"They are also the ones who are largely responsible for bringing in concepts such as ‘experiential luxury’ into the limelight," Kotak Wealth Management said in a report. 

Morover, the boom in e-commerce and technology sector have created many relatively young ultra HNIs who have sky-high aspirations and desires when it comes to luxury in their lifestyle.

The growth of ultra high networth individuals (HNIs) in the country has risen moderately by 7.3% to 1.47 lakh in FY16, cited the financial services company. It was 1.37 lakh in the previous fiscal.

The total wealth of ultra high networth individuals (HNIs) or those with a networth of over Rs 25 crore (Rs 250 million), grew by 5% to Rs 1.35 crore (Rs 135 trillion) during the period.  

The latest report, prepared by professional services firm Ernst and Young (EY) for Kotak Wealth Management, focused on earning, spending and investing patterns of the country's ultra high networth individuals. 

During FY16, ultra HNIs invested around 39% money into equities, followed by 28% in real estate,  22% in debt while alternate investment accounted for 11% in FY16. Commodities investments attracted attention of 72% of ultra HNIs in FY16.

The report has projected the number of ultra HNIs to grow 2.94 lakh with a combined networth of Rs 319 trillion by the fiscal year 2020-21 (FY21). 

The growth will be driven primarily by new ultra HNIs from emerging sectors and newer avenues of investments promising higher returns. 

Smaller cities will also contribute to the growth of ultra HNIs and their wealth, it said.