India’s truly rich suffered a momentous fall in wealth in 2008. According to Forbes, in February there were almost 50 billionaires in India, worth $278. By November the wealth of this group had fallen to $116 billion, and many were no longer billionaires. Is this cause for concern or celebration? Let’s put the numbers in perspective. In 1996 there were only two billionaires, worth $3 billion, amongst Indians living in India. By 2001, the number had risen to 4, worth $14 billion. And even after the fall in 2008 the total wealth of billionaires was still above the 2006 level.
The immense absolute expansion also saw a striking relative expansion, in relation to GDP, and in relation to other countries. Take the ratio of billionaire net worth to GDP. On this measure India hardly appeared in the charts in the mid-1990s, and was way below other developing and industrialised countries. By 2007—before the 2008 roller coaster—by this indicator India had leapfrogged all Latin American countries, including Mexico, a country renowned for its billionaires. It was also above the United States, around the same as Israel and Malaysia, and only significantly less than Russia, Kuwait and Saudia Arabia.
Is billionaire wealth a sign of India’s extraordinary business success at home and abroad? Or a socially intolerable manifestation of extreme wealth in a society where most are still poor by global standards? Does it presage long-term dynamism or rising capture of the state? As often in India, there is probably some truth in all of these.
Take first the view that billionaires are a manifestation of the triumph of Indian capitalism. Billionaire wealth is primarily linked to corporate performance in family-controlled business groups, especially in industry, services and mining. Dynamic individual entrepreneurs innovate, take risks and have the capacity to raise money. The emergence of the IT industry was an iconic example.
Family-based capitalist enterprise has indeed been central to growth in most, if not all, historical cases—the United States in an earlier period, much