Do billionaires matter? Or, to put it differently, is it bad for a country to have too many billionaires? Does it indicate a malfunctioning political and economic system? The answer is important because India has got the world’s third-largest number of billionaires at 169, according to Forbes, despite the fact we’re still a relatively poor country.

Economist Ruchir Sharma notes in India and Russia billionaire wealth totals 20 per cent of GDP. What’s more, he writes in the Financial Times, 60 per cent of India’s billionaires have had a ready-made rich-list berth because they inherited their wealth (Russia’s just ahead at 62 per cent).

All this is despite massive changes in the business world and the multiple leaps the economy has made. Think of the infotech sector’s emergence; or the revving-up of the two-wheeler sector to become the world’s largest. Back around the 1990s, the Birlas were the wealthiest business house. They stayed at the top until Dhirubhai Ambani gate-crashed the rich list. Tech giant Infosys staged its first IPO in 1993. Nevertheless, it looks as if the inheritors of big wealth still rule large swathes of India’s economy.

Sharma reckons countries with an excess of billionaires and inherited wealth run risks of greater social unrest amid growing inequality. He points out LVMH chair Bernard Arnault, the world’s second-richest worth an extraordinary $202 billion, was a main target of Paris protesters recently. And globally there are now 2,500 billionaires worth an extraordinary $12 trillion. Back in 2000, there were only 500 and they were worth less than $1 trillion.

It can be argued also having 169 billionaires is an indication of growth. India’s prospering tech sector has minted nine billionaires. HCL’s Shiv Nadar is worth $24.7 billion and is India’s third-richest behind only Reliance’s Mukesh Ambani and Gautam Adani. Wipro’s Azim Premji is close behind at $23.6, according to Bloomberg. The tech sector’s still producing new billionaires, the latest being Zoho’s Sridhar Vembu who Forbes reckons is worth $3.8 billion. Other wealth-chart newcomers like online retailer Falguni Nayar and online discount broker Nithin Kamath are heavily dependent on the latest technology. Then, look at the pharma and healthcare sector where India has built markets globally. According to one estimate, there are 15 billionaires in healthcare and pharma. At the top is Dilip Shanghvi worth $16.2 billion, followed by others like Murali Divi of Divi’s Laboratories whose fortune is pegged at $6.6 billion. Clearly, some industries benefit from our 1.4-billion population’s sheer size. Low-cost airline IndiGo, which just struck a record $50-billion Airbus purchase deal, is clearly betting on the Indian aviation market growing exponentially. IndiGo’s Rahul Bhatia is worth $5.3 billion, according to Bloomberg.

Inherited wealth

Even when it comes to inherited wealth there could be question marks. Wipro was started by Premji’s father as an edible-oil producer. Azim Premji took it into an entirely different direction and turned it into a world-beater. And Eicher’s Vikram Lal inherited a company making around six tractors a month. Today, with some help from his son Siddharth, Lal is worth $6.6 billion. Gautam Adani came from an affluent family but he has turned the group into a giant.

On a different note, Sharma notes countries with ‘socialist tendencies’ where there’s rampant red tape and the government has a strong say in industrial policy tend to create more billionaires. He suggests the reason may be that “socialist tendencies may backfire by concentrating rather than spreading wealth. Increasing regulation favours big tycoons, who have the lobbyists and money to navigate an expanding thicket of rules.” Sharma includes both India and Russia in this category.

Sharma also divides billionaires into “good” and “bad” by estimating the share of wealth from productive industries like technology and manufacturing as opposed to sectors like real-estate or oil which he sees as less productive and more corruption-prone. In this instance, he concludes India doesn’t fare so well as most gains have accrued to a small group of families in crony capitalism-prone sectors.

So, back to the question: are too many billionaires bad for economies? We’re living through a period where the largest corporations are bigger and the richest tycoons are richer than ever before and an increasing number are in emerging countries.

Also, extreme wealth and poverty are rising simultaneously. While few countries become wealthier without the super-rich’s contribution, we know too much wealth concentration and crony capitalism as well as rising inequality hinders growth. The answer in India’s case lies in getting the balance right through policies promoting growth, quality healthcare, good education and all-important jobs.