The Prime Minister’s Office has published the assets and liabilities of the union council of ministers. As we reported when the new cabinet was sworn in, members of this cabinet are poorer overall than the one that it replaced, even though 17 of the 22 ministers are crorepatis (net worth of more than Rs1 crore or $162,926).
The poorest member is urban development minister Venkaiah Naidu, with net assets of Rs22 lakh ($35,834.98), while the richest is the former lawyer Arun Jaitley, who holds the key defence and finance portfolios and is worth Rs72 crore ($11.7 million).
But the men and women holding the reins to India’s growth and future have not done a good job of planning for their own retirement or optimally investing their assets.
“It stands out that none of these ministers have much investment in equity and equity-related assets,” said Suresh Sadagopan, founder of Ladder7 Financial Advisory, who analyzed the declared assets of Narendra Modi, Arun Jaitley (defence and finance), Rajnath Singh (home), Sushma Swaraj (external affairs), Smriti Irani (human resource development) and Maneka Gandhi (women and child development) for us. He offered the advice with the disclaimer that he was working with limited information and only what is in the public domain. Professional financial planners need to know personal goals before they can offer advice.
Except Gandhi, the others are holding their assets mostly in traditional instruments. The interest income from some of the traditional instruments is taxable and the returns are not good enough, keeping inflation in mind, to support someone during retirement, Sadagopan said.
The asset portfolios of ministers are heavily loaded with property and jewellery. Neither are very good stores of value, Sadagopan said. “The property market is not very developed in India for investments. The location of the property and the development of surroundings areas can affect their value unexpectedly,” he added.
The value of Narendra Modi’s residential property has grown exponentially. The property he bought in Gandhinagar for Rs130,488 ($2,125) in 2002 is now valued at Rs1 crore ($162,904). He has Rs17 lakh ($27,690) in a fixed deposit and Rs4.3 lakh ($7,005) in National Savings Certificates and in Insurance policies. “There are no regular cash flows from the savings invested in an insurance policy. Also, the interest would vary between 3.5% and 7%. Depending on what kind of NSC it is, the return will be between 8.5% and 8.8%. If this is all he has, he will find it very difficult to sustain himself,” Sadagopan said.
He has agricultural land worth Rs50 lakh and a residential property worth Rs1.4 crore ($228,040.82). Singh also has a revolver and two guns besides jewellery worth Rs4.8 lakh ($7,819). He also has Rs60.71 lakh ($98,912) in banks and Rs70,000 ($1,140) in hand. “Rajnath Singh’s savings seem like a cause for worry. The return on agricultural land is marginal. Even if you are doing agriculture, you can only get 5-10% return on it,” Sadagopan said. He may not liquidate the guns and will probably live in the residential property. “Fixed deposits and savings accounts are not the best way to help the savings grow significantly,” Sadagopan said. His portfolio seems “fraught with danger”, he added.
Smriti Irani has total assets of Rs 4.15 crore ($676,055). Out of this, Rs 4.9 lakh ($7,980) is cash in hand. She also has a small amount invested in mutual funds and shares. “We don’t know her requirements but typically this much cash in hand is not suggested,” Sadagopan said. There is too much dependence on land and property in her portfolio. “While her case isn’t bad, she could reallocate the bank balance and the amount in Kisan Vikas Patra into higher yielding assets. Depending on her risk appetite, she could put her money in debt funds,” he added. Irani has Rs26.2 lakh ($42,671) as bank balance and Rs29 lakh ($47,242) in Kisan Vikas Patra. She has two residential properties in Mumbai and Goa and five plots of agricultural land in Maharashtra.
Her net assets are Rs2.7 crore ($439,843). Of this, Rs1.4 crore ($228,097) are in fixed deposits. She looks like someone who is very risk averse from her declared assets, Sadagopan said. He adds that the fixed deposits could be reallocated depending on her risk appetite. She could invest in a debt fund if she is not comfortable with the higher risk of equity, he recommended.
Jaitley, a successful lawyer, is the richest minister in the cabinet. His net assets are Rs72.10 crore ($11,745,443). He has vehicles worth more than Rs3 crore ($488,778), bank balance of Rs75 lakh ($122,195) and Rs1.3 crore ($211,726) as cash in hand. While retirement shouldn’t be a concern for Jaitley, his asset portfolio is slightly skewed, Sadagopan said. “He seems to have overdone the investment in land (Rs35.2 crore) and he should reallocate it. The bank balance could be brought down as well and Rs1.3 crore of cash in hand should be reallocated. While there is enough allocation in growth assets, he could invest more in equity,” Sadagopan said.
Maneka Gandhi is well funded. Her total assets are worth Rs37.68 crore ($6,139,059). She has residential property worth Rs18 crore ($2,932,288) and commercial property worth Rs 6.9 crore ($1,124,044). She has fixed deposits worth Rs6.3 crore ($1,026,183) and Rs97.3 lakh ($9,158,488) in bank deposits. “Maneka Gandhi is the only one who also has significant investment in mutual funds and shares. Her asset allocation is good,” Sadagopan said. 30% of her savings are invested in growth assets, which puts her in a good position in terms of returns. She hasn’t declared how much money she gets from the rent on the commercial property.