What Household Asset Distribution In India Tells Us
Indian households own more assets than ever today. This is not surprising because the Indian society has become far more prosperous since Independence. Economic growth has been fast, since the reforms of the early 90s.
According to Boston Consulting Group (BCG) , in 2015, 928 households own one-fifth of India's private financial wealth. The BCG expects this to grow to 24 per cent by 2019. The BCG also observed that households that own wealth worth more than $1 million, hold 36 per cent of India's private financial wealth. The rate of growth of wealth is the highest among households that own assets worth more than $100 million. But this is not a bad thing as many assume because the wealth of the households in the bottom half of the income pyramid has been growing too, in the past 25 years. Maybe a small fraction of the households owns much of India's wealth.
When The National Sample Survey Office (NSSO) did a survey of households assets in 2012-13, they found that the bottom 10 per cent of urban households have an average of assets worth Rs 291 each. But the bottom 10 per cent of the rural households have assets worth Rs 25,071 each. An average rural household has assets worth Rs 10 lakh, and an average urban household has assets worth Rs 23 lakh. At first glance, it would seem that the poorest urban households experience the worst sort of poverty. But there is more to this than meets the eye. Being urban is a choice. Many of them are recent migrants to large Indian cities. They left behind their assets in villages. So, contrary to what many believe, this does not mean that life in urban India is horrible. This means that people are willing to migrate to large cities, even at the cost of leaving their assets elsewhere. This means that migrating to cities is worth it, even at a huge cost. Much of the assets of rural Indians is in the form of land. Real estate seems to form a large fraction of the assets of Indians, whether rural or urban.
The average household assets in urban areas are the highest in Maharashtra, the Indian state that has the highest slum population. A look at the financial assets shows that most Indians do not benefit from formal banking. Financial assets of rural households are about two per cent of their total assets, while this is five per cent for urban Indians.
According to the Census of India, in 2011, of the 78.86 million urban households, 64.67 million households had a telephone. By global standards, this does not seem much of an achievement. But this is quite an achievement given how rare telephones were, not very long ago. Without the high private participation in the telecom industry, this would not have happened. For housing to become similarly affordable, India's land markets should see major reforms.
In areas, in which the government is involved, we see greater impoverishment. For example, of the 78.86 million urban households, only 0.18 million households use electricity for cooking. Of the 167.83 million rural households, only 0.19 million households use electricity for cooking. Of the 167.83 million rural households, 116.25 million households do not have latrines, and only 51.70 million households get tap water. In urban areas, of the 78.86 million households, only 55.70 million households get tap water. Without greater private sector involvement, this is unlikely to improve significantly in the near future.
