India has recently surpassed Japan to become the world’s fourth-largest economy, with a GDP of $4.19 trillion, a remarkable milestone that highlights the country’s growing economic strength. However, there is another side to this growth story. A recent report by Bernstein reveals that the top 1% of wealthy Indians control a disproportionately large share of domestic wealth.
This paradox paints a picture of ‘One Nation, Two Worlds’, where the country is becoming richer, yet its wealth remains concentrated in the hands of a few. This article dives deeper into that reality.
World Where Just 1% Hold the Wealth
The figures from US wealth management firm Bernstein’s report are startling, revealing that India’s top 1% controls nearly 60% of the nation’s domestic wealth. This is an enormous share, showing that the majority of India’s wealth is concentrated in the hands of a very small section of society. India’s total domestic wealth is estimated at $19.6 trillion, of which this wealthy elite holds around $11.6 trillion (about 59%).
However, the story does not end here. When it comes to financial assets, the gap becomes even wider. The report states that this top 1% holds 70% of the country’s total financial assets. The 10% difference between their share of total wealth (60%) and financial assets (70%) highlights an important fact: their influence on India’s capital markets and corporate sector is far greater than their overall wealth share alone suggests.
Gold and Real Estate: Real Treasure of the Rich
India’s wealthiest prefer to invest 60% of their money in just two assets — real estate and gold. This is not merely an investment choice but a deliberate strategy. For centuries, Indians have regarded gold and land not only as symbols of wealth but also as the ultimate sources of security and stability.
According to the data, out of the $11.6 trillion owned by this wealthy class, only $2.7 trillion is invested in actively manageable financial instruments such as mutual funds, insurance, equities, and bank deposits. The remaining $8.9 trillion — a massive share — is locked in non-serviceable assets like physical real estate, gold, cash, and unlisted promoter equity.
When a Nation’s Progress Gets Locked in Vaults
When 60% of the nation’s wealth is concentrated in the hands of just 1% of the population, the impact ripples across the entire economy. Even though India has become the world’s fourth-largest economy, it still lags far behind in terms of per capita income (GDP per capita). India’s per capita income is around $2,934, compared to $33,955 in Japan and $55,911 in Germany. This stark gap shows that the benefits of India’s total GDP are not reaching ordinary citizens equally.
After overtaking Japan, India is now on track to surpass Germany by 2028.
This creates a cycle where the rich grow richer through the rising value of their assets, while the rest lag behind. The situation also distorts the story of India’s stock markets. Even if the Sensex hits record highs, the direct benefit doesn’t reach most of the population if 70% of financial assets remain concentrated in the hands of just 1%.
Moreover, the locking of nearly $8.9 trillion in gold and real estate represents a massive opportunity cost. If this capital were instead channelled into start-ups, new industries, or infrastructure, it could generate jobs and accelerate economic growth.
Will the Younger Generation Break This Tradition?
The next question is — will this trend continue? By 2028, India is projected to surpass Germany to become the world’s third-largest economy, with GDP expected to exceed $5.7 trillion. According to Bernstein’s report, the wealthy population in India is likely to grow even richer. Within this class are nearly 35,000 ultra-high-net-worth (UHNI) families, each with assets exceeding $12 million.
However, some changes may be on the horizon. As the next generation of wealthy Indians, more familiar with global markets and new technologies, takes the reins, their preferences could shift away from traditional gold and real estate toward global equities, venture capital, and digital assets. If that happens, it could significantly increase capital flows within the economy. Yet for now, one thing is clear: India’s growth story is as complex as it is impressive.
For the moment, however, Bernstein’s report sends a clear message, India’s wealth gap is widening, and bridging it will require serious efforts at both economic and policy levels.
*The article is for information purposes only. This is not investment advice.
*Disclaimer: Teji Mandi Disclaimer
