Charting the Growth Patterns of India's Burgeoning Class of Billionaires

October 18, 2012
By Doug Gavel

As one of the world's fastest growing economies, India is experiencing a boom in the upper income classes. The number of billionaires has expanded from just two in the mid-1990s to 46 in 2012. A new research paper co-authored by Harvard Kennedy School lecturer Michael Walton examines the many factors behind the burgeoning wealth patterns in India, and the relationships between the super rich and average citizens in the country.

"The extent of wealth raises questions for India's economy and polity," the authors write. "It might be a sign of the dynamism of India's corporate sector. Or it could be problematic to have such extreme wealth amidst both continued poverty and a clearly corruptible state."

Accessing data from forbes.com, the authors reach several interesting conclusions:

  • The nation's 46 billionaires had a total net worth of $176.3 billion in 2012;
  • The primary sources of wealth for 43% of all billionaires in the country were identified as coming from "rent-thick" sectors (real estate, construction, infrastructure or ports sectors, media, cement, and mining);
  • The ratio of total billionaire wealth to gross domestic product rose from approximately 1% in the mid-1990s to 22% in 2008. It dropped to 10% in 2012, which was still above that in the United States and the United Kingdom.

"There is a real question as to whether an oligarchic business structure and a corruptible state will lead to the propagation of inequality and create distortions that hurt the growth process," the authors conclude. "This is not necessary, as illustrated by the US reform experience in the first part of the last century--though the more recent US experience with the financial crisis shows that the effective regulation of capitalism continues to be a major issue. The rise of India's businesses on the global stage can be consistent with a murky domestic scene. Which path India follows will have a powerful influence on growth, inequality and the nature of the state."

"Where Do India's Billionaires Get Their Wealth" is published in the October 6, 2012 edition of "Economic & Political Weekly." It is co-authored by Aditi Gandhi of the Centre for Policy Research, New Delhi.

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Michael Walton picture

Michael Walton, lecturer in international development

"There is a real question as to whether an oligarchic business structure and a corruptible state will lead to the propagation of inequality and create distortions that hurt the growth process," the authors conclude.