Why no wealth effect despite very high asset prices?

What creates a wealth effect? " The rule of thumb has been that for every $1 increase in household's equity wealth, spending increased 2 cents to 4 cents. For residential real estate, the increase is even greater: consumer spending increases 9 cents to 15 cents," says an article in Bloomberg. If that is so wealth effect in India should be huge because both stock and real estate prices have soared in recent years. Yet, the Governor of the Reserve Bank, Raghuram Rajan has cautioned against euphoria. According to World Bank figures he is right. Comparing China, Vietnam, Indonesia and Bangladesh with India, we are the lowest in cell phone subscriptions, last in cereal yield and lowest in fertilizer consumption, but the highest in cost to export. Port charges are very high, turnaround times at ports are very long and it costs a fortune to transport goods across the country because of delays at toll plazas and high toll charges. The IMF forecasts are also cautious. Growth will remain the same for the next 2 years, volume of exports will remain low and inflation will be stubborn at above 5%. The interesting bit of information is that gross national savings will fall to around 30%. It was above 35% in 2007. The Federal Reserve Bank of Dallas states that "higher incomes and household wealth boost spending. Higher, real (inflation adjusted) interest rates - reduce current spending". There must be great wealth effect in India because savings are dropping, which means that people are spending more. This would seem to be borne out by the high inflation rate. Less than 1.5% of Indians invest in stocks, compared to 10% in China and 18% in the US. Just 2% of household savings in India are in stocks, compared of a long term average of 45% in the US. The real estate sector has been stagnant for 2 years. Recently Mr Rajan advised real estate developers to reduce prices to attract buyers. But developers are unwilling to reduce prices despite sitting on large unsold inventory. Why so? " We need action on real side (as) also on transparency on land acquisition, on transparency on construction and on sales," said Mr Rajan. What he means is that they should eliminate black money on buying land and cheating investors by delaying handover of properties or taking money for not building any property at all. The RBI has lowered interest rate from 8% to 6.5% but that has not increased corporate borrowing. Instead personal loans and credit card use are going up, causing tension. Yet there are only 21.1 million credit cards in India in a population of 1,300 million. Credit card use is white money, so why the anxiety? Because they want the black money to come out from the shadows. Life is not easy, is it?