Private wealth on course to touch Rs 558 trillion by 2022

Karvy Private Wealth today said individual wealth grew 8.5 per cent to race past Rs 300 trillion mark at the end of 2015-16, driven by faster-clipped growth in physical assets, and will grow to Rs 558 trillion in the next five years.

"The demonetisation drive will have a short-term impact for up to one year and all the medium to long term projections do not get affected," its chief executive Abhijit Bhave said here today.

The individual wealth grew 8.50 per cent to Rs 304 trillion in 2015-16, on the back of a 10.32 per cent growth in physical assets to Rs 132 trillion and a slower 7.14 per cent growth in financial assets to Rs 172 trillion, he said.

Interestingly, Bhave is expecting a 12.90 per cent growth in individual wealth every year till 2020-21, by which time the overall individual wealth will go up to Rs 558 trillion.

Even though the physical assets led the charge last year, Karvy stated in a report that it expects a faster growth in financial assets over the next five years (14.73 per cent) which will deliver the high growth in wealth.

In the long-run, the country is expected to outshine its emerging market peers, including China, owing to changing positive dynamics, especially the government's reforms push like introduction of the GST, Real Estate (Regulation and Development) Act and the Bankruptcy Code.

The report said the demonetisation exercise will also have a positive impact in the long-term as more wealth enters the formal financial system.

However, share of investments in physical assets such as gold and real estate-- both considered a haven for black money-- will come down, he said.

Investments in fixed deposits and bonds constituted the bulk of 21.40 per cent of the overall Rs 304 trillion in wealth, followed by direct equity at 17.23 per cent and insurance at 14.81 per cent.

Gold investments account for nearly half of the wealth in physical assets, followed by real estate at 42 per cent.

Other categories like diamonds, silver, platinum and other gems and jewellery account for small percentages.