Rich Grow Richer in India's Sinking Economy

The Union Minister Kapil Sibbal told a TV news channel the other day that the GDP growth witnessed during the 10 years of UPA rule was never seen before. No wonder the government has unleashed a barrage of adverts showing the UPA version of “India Shining”. Many will take the statement of Sibbal with fistfuls of salt. At the same time, looked at from another angle it would seem largely true. If one cannot quite lump it one might just read on and look at the kind of growth the country has had.

Arguably, Mumbai is the richest city in India. It has been so for most of the post-independence years. But, the kind of riches its citizens flaunt today was unheard of earlier. Take for instance a recent screaming headline in a national daily. Mumbai, literally, is going to have “castles in the air”. Ten such “castles” of 18000 square feet each are coming up in an ultra high-end apartment complex costing a cool hundred crore, i.e. a hundred million rupees (around 60 million dollars). The complexes come with dog parks, crèche, an elevated jogging track and other thoughtful amenities.

The “uber-luxury” apartments have their own restricted clientele who never seem to have heard the term “slow-down”. Duplex apartments in such complexes come with private pools, sundecks, multi-level automated parking and five-star clubs  and can cost as much as Rs. 1 lakh (a hundred thousand rupees) a square feet (about 100 crores for 10,000 square feet). Sold only by invitation, five Signet residences on the 40th floor of Lodha’s World Tower received overwhelming response and were lapped up for Rs. 75,000 per square feet. Located in Worli it is touted as the world’s tallest residential tower at 442 metres. It boasts of interiors by Armani and a club and a spa by Six Senses among other high-end labels.

Readers will recall a recent controversy over the plan to build super luxury apartments within peeping distance of the President’s House. The project proponent seems to be so powerful as to have had the objections of the security agencies brushed aside. The proposal continues to be alive and it would be interesting to see what eventually transpires.

Residences costing scores of crores are no big deal in Mumbai. Antilia, the house of tycoon Mukesh Ambani, cost him $2 billion, I suppose, more than 10000 crores in Indian money, making it the costliest house in the world. Not to be terribly outdone, his younger brother Anil built a slightly less costly one in Rs. 4000 crores. There are smaller fries like Amitabh Bachchan, senior thespian of Bollywood, who bought a new bungalow for Rs 50 crores (5 billion rupees) despite having four of them already and Sachin Tendulkar, the legendary cricketer, is going to move into his new Rs. 80 crore (8 billion rupees) house. Paying 10 or 20 crores for a 3 or 4 bedroom houses seems like spending loose change. Bangalore too boasts of such properties that cost multi-crore and claim a pool or a garden in front of every bedroom. Even 3 and 4 tier towns have high-end properties that are worth several crores. People like us, the retired civil servants, cannot conceive of the way such properties are sold and bought.

The country has emerged as the biggest market for business jets in Asia-Pacific region. It has surpassed far richer China as a number of business houses and high net-worth individuals (HNIs) have started acquiring aircraft. According to Beechcraft, a leading manufacturer of business aircraft, India has a fleet of 254 business aircraft against 213 in China, 192 in Japan, 150 in Hong Kong, 66 in Malaysia and only 53 in Thailand – all supposedly richer than it.  A report says that even during the slow-down years of 2008-12 Indians purchased 38% more aircraft than in the preceding five years. Experts in the field of business aircraft are bullish about India. They expect a steep rise in the number of HNIs as surveys have indicated that the Indian economy is going to grow “significantly” in the next five years. Beechcraft, therefore, considers India as a very “exciting market” for business aviation and has committed significant investments for registering its presence in the country.

Another recent complementary report said that the number of indigenous billionaires (in dollar terms) is set to double during the next ten years. With 60 billionaires already in the country it ranks sixth among top ten countries. By 2023 the number is expected to rise to 119 according to the Wealth Report of Knight Frank who runs a global consultancy firm. With the global rise in the numbers of ultra-wealthy in 2023 only three countries, USA, Russia and China will have more billionaires than India. That’s saying quite a lot for the country’s business acumen.

Earlier during the pre-independence years we knew of maharajas maintaining huge garages for stabling their car collections. Maharaja of Gwalior (the grand-father of the Central minister Jyotiraditya Scindia) was called the Prince of Mercedes owning as many as 75 of them apart from assorted Rolls Royces, Bentleys, Cadillacs, Packards and sundry high-end European cars like Alfa Romeos and Hispano Suizas. Today, leave alone the business/industry tycoons, even film stars maintain a handsome stable of cars. Amitabh Bachchan has many among which is a multi-crore Rolls Royce and he gifts his son a 2-crore Bentley without batting an eye-lid. An up-and-coming actress acquired a bespoke Rolls Royce. The legendary cricketers like Tendulkar and MS Dhoni, likewise, own fleets of luxury cars, Dhoni even having a battery of high-end exotic motorbikes. 

With money flowing in with Sibbal’s growth, the rich are now graduating to luxury yachts. The earliest owners were Vijay Mallya, Gautam Singhania and Anil Ambani. They are now not the only ones; every fat cat wants one and now the country has around 150 of them crowding the sea off the Gateway of India. The itch is fast progressing southwards to Goa and Kerala.

All this does not take into account the cash illegally stashed away abroad. Estimates vary about the amount but the Central Bureau of investigations once submitted before the Supreme Court that Indian are estimated to have about $500 billion in banks abroad. That was in 2011. It may well be well above that figure now with all those enterprising people having made far more money in the interregnum. The government has put the lid on the cashe of information so firmly that none has been able to pry it open.

After all, its own big guns and other politicians are all reported to be guilty of sneaking away money to foreign lands. One can, however, gauge the ill-gotten riches of Indians by the inestimable wealth of the Hindu temples. An erstwhile mining magnate of Karnataka had made an offering of gold and diamond coronet to his deity in a Southern temple costing around 2.5 billion rupees.

Down below, the middle classes are also doing not too badly. There is a housing boom with luxury apartments in gated complexes coming up all over the country. A hundred thousand today is meaningless money. You have to have in several multiples of it to be able to get going in kind of a middling life. Mercedes, Audis and Range Rovers are in profusion and so are Hondas that clog the lanes and by-lanes with houses unable to accommodate multiple sedans. Tata’s compact cars Nanos are a no-no and Maruti Suzuki 800 has become extinct.

Sibbal is, therefore, right! There has been unprecedented growth during these ten years not in the economy but for the tycoons and, of course, politicians many of whom have become crorepaties (billionaires). That the economic growth has dived into the pits, foreign investment is conspicuous by its absence – even the Indian investors have migrated abroad, manufacturing is scraping the bottom with job creation virtually zero and the persistent high retail inflation – all that and many more, taken together is another story. For Sibbal growth has taken place in right quarters. As for the poor, they can wait; years and years of democratic India is ahead of them to play the catch-up game. Where is the hurry?


More by :  Proloy Bagchi

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Views: 3447      Comments: 2

Comment Super-prime new property in Westminster (London) is sold in Hong Kong and Dubai, not London, and then left empty ā€“ to be sold a few years later at a profit. This form of investment is termed 'buy-to-leave'. It is another facet of the power of wealth to create its own rules while abiding by the rules.

29-Mar-2014 20:04 PM

Comment ā€œEarth provides enough to satisfy every man's needs, but not every man's greed.ā€
? Mahatma Gandhi

Suraish Singh
29-Mar-2014 14:31 PM

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