India's Household Debt Hits Record High

• 27 Apr 2024

According to a study, India's household debt reached a new peak, with non-housing debt growing faster, sparking worries about consumer borrowing and financial stability.

Key Points

• Record Household Debt: Household debt in India hits a new high of 39.1% of GDP in Oct-Dec 2023, up from 36.7% a year ago.
• Rising Non-Housing Debt: Non-housing debt grows faster than housing debt, indicating increased borrowing for consumer goods.
• Concerns for Financial Stability: Rapid rise in unsecured loans alarms the central bank, fearing stress in banks' books.
• Impact on Financial System: Bad debts from unsecured loans could lower banks' ability to lend and threaten financial stability.
• Comparison with Other Economies: India's non-mortgage household debt is comparable to Australia and Japan, raising concerns.
• Regulatory Measures: RBI makes it costlier for lenders to disburse unsecured loans amid warnings about rising unsecured loan portfolio.
• Economic Implications: Rising debt levels could impact India's consumption-driven economy and financial savings.