Nirmala Ganapathy (The Straits Times), The Asia News Network, New Delhi, India | Fri, 01/13/2012 11:43 AM
India's super rich are not as rich any more.
The number of billionaires in India dropped sharply last year, their holdings falling victim to a volatile stock market and a weak currency. There were only 40 billionaires last year, down from 60 a year earlier, according to the latest study by The Economic Times Intelligence Group. Even the 40 who are still in the club took a hit: They lost about 38 per cent of their collective wealth last year.
India had a bumpy ride through last year, with the Sensex – the Bombay Stock Exchange's benchmark index – falling 25 per cent, making it one of the worst-performing equity markets.
Inflation stayed high, touching 9 per cent, despite concerns over a slowing economy. The rupee continues to languish, falling to an all-time low against the United States dollar early this week.
Meanwhile, the Manmohan Singh government, paralyzed by a string of corruption scandals – including the billion-dollar scam involving the sale of 2G telecoms licenses – has failed to push through economic reforms.
The fall in the stock market, according to the study, had the biggest impact on India's billionaires, many of whom own large amounts of stock in their own or family-run businesses. Said The Economic Times: "The stock market meltdown caused by the economic slowdown and the government's policy paralysis wiped out a chunk of promoter wealth."
The drop in the number of Indian billionaires is in contrast to China, where the number of billionaires last year shot up to 271 from 189 in 2010, according to the latest comparable report, the Hurun Rich List, calculated in August last year.
In India, heavy hitters like H.V. Goenka of the RPG Group, an industrial conglomerate; L.M. Rao of the Lanco Group (infrastructure); the Dhoot brothers of Videocon (consumer goods); Manoj Tirodkar of GTL (telecoms infrastructure provider); and Tulsi Tanti of Suzlon (wind power company) were all ejected from the billionaire club, according to the study.
Of those who managed to keep their places, the Ambani brothers, who are in the midst of a bitter feud over the family empire, fared particularly badly.
Telecoms tycoon Anil Ambani was the biggest loser, seeing his wealth plunge from US$14.55 billion (S$18.8 billion) at the end of 2010 to US$5.53 billion at the end of last year.
Some of his executives were allegedly involved in the 2G telecoms scandal.
His older brother Mukesh, India's richest man, who recently built a 27-storey house in the middle of Mumbai worth an estimated US$2 billion, was not spared.
The chairman of Reliance Industries, which has businesses in energy, among others, saw his fortune nearly halved from US$34.75 billion to US$19.15 billion.
Other big losers included Sunil Bharti Mittal, who heads a group with interests in telecoms and retail, and Azim Premji, chairman of IT giant Wipro.
Mittal's wealth fell to US$16.77 billion from US$20.76 billion, while Premji saw his own shrink to US$14.62 billion from US$21.34 billion.
Financial analysts said the pared-down billionaire club reflects the slowdown in the Indian economy, as well as the government gridlock.
"The government needs to put its house in order," Hemen Kapadia, chief executive of Chart Pundit, a Mumbai investment advisory company, told The Straits Times.
"Interest rates were raised 13 times [to fight inflation] last year. There is a huge fiscal deficit, there is government infighting. No reforms are in sight, until maybe after the Uttar Pradesh elections. These have set India back by a year," he added.
State assembly elections will take place next month in Uttar Pradesh, the country's most populous and most politically important state. Meanwhile, many reforms have been put on the back burner, from those allowing foreign supermarket chains into India to the finalization of a land acquisition Bill vital for sorting out the tricky issue of acquiring land from farmers for infrastructure development.
Analysts attribute the volatility in the stock market to a combination of factors, including investors pulling funds out from riskier markets such as India, the fall of the Sensex spooking many middle class Indian day traders and the impact of the European debt crisis.
Said Jigar Shah, head of research at Kim Eng Securities India: "Investors are completely fleeing the market. Retail investors are not around... and foreigners are not trading in a big way." (mtq)
