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A high fiscal deficit is a double-edged sword: if financed out of new money, it fuels inflation; if the government borrows from the market to fund it, private investment gets crowded out. That's why the one Indian number global credit-rating agencies track relentlessly is the fiscal deficit. At the moment, the country is just a notch above junk status. To avert an embarrassing downgrade, Finance Minister P Chidambaram cut expenditure ruthlessly and extracted higher dividends from public-sector companies in the past few months, causing much heartburn all around. Some have alleged that he has even appropriated next year's revenue and postponed some liabilities. Now, if a hundred Indians were to monetise their shares and pool it together, their Rs 12,02,364 crore could bridge the deficit totally - this year's (Rs 5,24,539 crore) as well as next year's (Rs 5,28,631 crore). Inflation would cool off. Investments would begin to flood in. Everybody would live happily ever after.
After the great service to the country, they would still be left with almost Rs 1,50,000 crore. Suppose, Mark Zuckerberg decides to sell WhatsApp, which his Facebook bought last week for $19 billion, at a premium of 25 per cent, or $23.75 billion - these 100 Indians would find the money for it. They would still be left with over Rs 2,500 crore. That's Rs 25 crore apiece: worth over 80 kg of gold. In a fixed deposit with 8.5 per cent interest, it would yield over Rs 2 crore a year, or Rs 17 lakh a month - enough to live comfortably in any corner of the earth. These 100 Indians are members of The Billionaire Club, Business Standard's annual ranking of the richest Indians according to stock market wealth.
There might be sluggish economic growth and angst all over the country, but the fortunes of these men and women have collectively improved by over 9.4 per cent between December 31, 2012 and December 31, 2013. (The Sensex grew a fraction below 9 per cent in the period.) The list is topped once again by Mukesh Ambani of Reliance Industries, who has seen his wealth grow by Rs 5,697 crore, or 5.1 per cent. Azim Premji of Wipro, with a gain of Rs 25,345 crore, has replaced Sunil Mittal of Bharti Airtel in the second spot. The telecom czar, in spite of gaining Rs 2,929 crore, is now third on the list. Dilip Shanghvi of Sun Pharma has increased his net worth by Rs 28,945 crore and has jumped from the fifth slot to the fourth. Last year's fourth-richest billionaire, Anil Agarwal (Sesa Sterlite), has gained Rs 2,985 crore but has slipped to the fifth position. (Highs and lows)
If their wealth is converted into dollars (Rs 62 to a dollar), there are 43 billionaires on the list, down from 46 last year (when the exchange rate was Rs 55 to a dollar). Had the rupee not depreciated during the period, the list would have had 49 "dollar" billionaires.
The cutoff to enter the club has slipped: from Rs 1,927 crore (Bhadresh Kumar Shah of AIA Engineering) in December 2012 to Rs 1,877 crore (Rohtas Goel of Omaxe) in December 2013. Vijay Mallya (United Spirits), India's one-time answer to Richard Branson, has added Rs 1,184 crore to his kitty to rank 21st. His business - and credibility - might be in the dumps but the man has made gains of over Rs 8,100 crore in the last two years.(INDIA'S SUPER RICH)
Information technology, or IT, has been the biggest wealth creator in 2013. Consumer sentiment improved significantly in the United States, the largest market in the world, during the year because of positive macroeconomic developments. That's why all the eight IT billionaires have added significant wealth in the last one year: from 31 per cent (Atul Nishar of Hexaware) to 86 per cent (Shiv Nadar of HCL). The five Infosys promoters - NR Narayana Murthy, S Gopalakrishnan, Nandan Nilekani, K Dinesh and SD Shibulal - have seen their stock zoom almost by half. All five have moved smartly up the pecking order. Advocates of corporate governance may've cried themselves hoarse when Narayana Murthy returned in 2013 to lead the company, with son Rohan in tow as executive assistant, but the shareholders seem to have no complaints at all.
The biggest wealth destroyer has been real estate & construction. The glut in the market, coupled with the slowdown in demand and tight liquidity, has led investors to hammer most realty stocks. All nine representatives of the sector on the list have lost wealth: from 6.28 per cent (Ashok Kumar Ruia of Phoenix Mills) to 47 per cent (Jaiprakash Gaur of Jaiprakash Associates) and 54 per cent (Ramesh Chandra of Unitech). Kushal Pal Singh of DLF, the real estate king of India, has become poorer by over Rs 8,100 crore. In August 2007, Singh was worth Rs 90,821 crore. In the five years and four months since then, his wealth has shrunk to a quarter. Still, it's good enough to keep him at the 12th spot (8th in 2012) on the list. The fall in Chandra's riches has been steeper during the period: over 93 per cent. He is now 96th on the list.
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The biggest gainer across sectors has been Shanghvi. His Sun Pharma is the most profitable pharmaceutical company in the country, and has consistently delivered double-digit earnings growth. Most important, while others like Ranbaxy and Wockhardt have had quality-related issues with the United States Food & Drug Administration, Sun Pharmaceuticals has remained unaffected by such controversies. (There are 17 entries from pharmaceutical & healthcare on the list, up from 15 last year. This makes the sector the largest contributor to The Billionaire Club.) Habil Khorakiwala of Wockhardt has lost Rs 9,866 crore during the year and his ranking has fallen from 24th in December 2012 to 69th in December 2013.
Overall, the businessman who has lost the most is Naveen Jindal (Rs 10,276 crore). What has roiled the party for him is the alleged involved of his company, Jindal Steel & Power, in Coalgate: the opaque allotment of coal mines by the United Progressive Alliance government between 2006 and 2008. Investors have begun to exit companies that are believed to have grown because of their closeness to the United Progressive Alliance because of the implicit political risk - the company may be hounded now that a change of guard in New Delhi is imminent. Jindal also happens to be the Congress MP from the Kurukshetra constituency in Haryana. All told, 39 businessmen lost wealth in 2013.
Jindal has also yielded the top slot amongst the country's highest paid CEOs. His package has fallen from Rs 73 crore in 2011-12 to Rs 55 crore in 2012-13, which has placed him at the third spot. The man on top now is Kalanithi Maran, the executive chairman of Sun TV Network, with a package of Rs 56.25 crore. He is followed by Kaveri Kalanithi, his wife and Sun TV Network executive director, who took home Rs 56.24 crore during the year.
The biggest story coming out of 2013 was the sharp deterioration in the popular perception of businessmen. Skeletons of financial impropriety stumbled out of sector after sector: telecom, energy, real estate, roads, defence, railways et cetera. Several businessmen spent time in jail. A few were caught red handed giving bribes. Many others had to face scrutiny. Serious manufacturing malpractices showed up in key sectors like pharmaceuticals and automobiles. Lapses in corporate governance became routine. Banks finally started to name and shame willful defaulters. And when a supposedly bankrupt Mallya bought Yuvraj Singh for a jaw-dropping Rs 14 crore for his Indian Premier League team, Royal Challengers, commentators went ballistic with their disapproval. It all culminated in Arvind Kejriwal, who many see as the only hope left for the country, calling Mukesh Ambani the symbol of crony capitalism in the country.
Ruchir Sharma, in his 2012 bestseller, Breakout Nations, had said that "many of India's super rich still inspire national pride, not resentment, and they can travel the country with no fear for their safety". However, he had warned that "this genial state of affairs can change quickly". There is some evidence of that happening now - India could be close to that tipping point. However, The Billionaire Club shows that most of the entries are from sectors that offer little scope for cronyism: pharmaceuticals & healthcare (17), automotive (9), information technology (8), finance (7) and consumer goods (6). Amongst the regulated sectors, there were construction & real estate (9), telecom (2) and energy (2). Still, because of the rising trust deficit, ostentation and blatant display of money power may not be a good idea in the age of Kejriwal.
