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| Mumbai: A screen on the facade of the Bombay Stock exchange displays the Sensex reaching 20,000 points on Oct. 29. Indian
shares soared to a record high Monday propelled by foreign fund buying. Gautam Singh/AP/file |
India's superrich get even richer
Since February 2007, the value of India's stock market has doubled to 20000 points, and the biggest winners have been India's richest. Based on these gains, India's four wealthiest men are now worth more than China's 40 wealthiest combined.
By Mark Sappenfield | Staff writer of The Christian Science Monitorand Anuj Chopra | Correspondent of The Christian Science Monitor
from the December 18, 2007 edition
Page 1 of 2
NEW DELHI and PUNE, INDIA - The mansion of Mukesh Ambani, the richest man in India, is something more than the average dream house. When construction is completed next year, his home will top 570 feet – the equivalent of a 60-story skyscraper – and include a helipad, six floors of parking, and 600 servants for a family of six.
Rising from a Bombay (Mumbai) neighborhood where rents run at $2,000 per square foot, the home is a monument to the enormous wealth generated by India's stock market – and how it has created a class of Indian superrich.
Since February 2007, the value of India's stock market has doubled to 20000 points, and the biggest winners have been India's richest. Based on these gains, India's four wealthiest men are now worth more than China's 40 wealthiest combined.
It is, in part, a quirk of South Asian business practices, where even the largest multinationals remain family-run enterprises with almost all their wealth and authority residing in one man. Yet some critics say it is also the result of India's inequitable investing laws, which are forcing small investors to the fringes.
As the stock market becomes a part of Indian cultural parlance, more investors further down the economic chain are finding ways to get involved. Yet the top-heavy distribution of India's stock-market billions is further amplifying the extremes of rich and poor in a country where an estimated 400 million people – more than the population of the United States – live on less than $1 a day.
"Most of the money in the market is still principally owned by the rich and by institutional investors," says Chris Butel, chairman of Invest India Market Solutions (IIMS), a research firm that has studied Indian investment patterns.
The result, he and others say, is that a very small number of people are accumulating fantastic wealth almost overnight. Mr. Ambani's fortune, estimated at $49 billion by Forbes, is built largely on the success of the stock of his company, Reliance Industries Ltd., which runs oil rigs and supermarkets, among other things. Last year, when stocks hit 10000, his wealth was one-quarter of its current total.
Likewise, the initial public offering (IPO) of Indian real estate developer DLF Enterprises earlier this year instantly made owner Kushal Pal Singh the world's richest property entrepreneur. Forbes puts his wealth at $35 billion.
The small club of India's superrich
All told, India's 40 wealthiest businessmen are worth $351 billion, according to Forbes – easily the most in Asia. Its four richest – steel tycoon Lakshmi Mittal, Ambani, his brother Anil Ambani, and Mr. Singh – hold more than half that sum.
It is partly the legacy of out-of-date laws governing stock offerings, says Prithvi Haldea, founder of Prime Database, a Mumbai-based market-research firm. When going public, India's largest companies need to make only 10 percent of their stock available to the public. Other Asian neighbors, such as Thailand and Malaysia, usually force a company to make available 25 to 40 percent of its stock.
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