Independent Research and Policy Advocacy

Why the land and gold obsession of rural Indians may be entirely rational

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What does the asset allocation look like for people living in remote rural India (villages with less than 5000 population)? My colleague Sowmya Vedula and I looked at the data from some of our investee companies and this is what the picture looks like across 250,000 individuals in rural Tamil Nadu, Uttarakhand and Orissa.

Above is an excerpt from Bindu Ananth’s latest column on the Forbes India Blog. Click here to read the full post.

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  1. I feel though the irrationality story on Real Estate will change quite a bit if the Human Capital of the household is taken into account. Since there is likely to be a strong correlation between these two assets it may be the case that there is over-investment in real-estate and very strong under-investment in Gold or other national assets. Given the very strong regulatory impediments that are preventing financial inclusion from moving forward I would not be surprised if Gold continues to remain the financial asset of choice and if you, as their wealth managers, should not actually encourage them to buy more of this assets and make it easier for them do so.
    On the issue of land as a “real” pension asset I wonder though if the size of the land-holding is not far in excess of that is required and if, given the high proportion of younger people in household, using this kind of a precautionary motive is not actually a riskier strategy for the household relative to holding more Gold or other national assets. Would be eager to learn what your data reveals and what your thoughts on this issue are.

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