Household debt jumps to 37.3 pc of GDP in FY21
   Date :06-Jul-2021

Household debt jump_1&nbs
Business Bureau :
HOUSEHOLD debt has sharply jumped to 37.3 per cent of the GDP in the pandemic year from 32.5 per cent in FY20, says a report, confirming the deeper financial impact of COVID-19. It also warned that the ratio may rise further this fiscal due to the second wave of the pandemic. In fact, household debt has been steadily increasing ever since the GST implementation in July 2017, which was preceded by demonetisation in November 2016. In four years since FY18, household debt has jumped by 720 bps from 30.1 per cent in FY18 which was year of GST implementation, to 31.7 per cent in FY19, 32.5 per cent in FY20 and to 37.3 per cent in FY21, according to the report by SBI Research on Monday. Household debt includes retail loans, crop loans and business loans from financial institutions like banks, credit societies, non-banks and housing finance companies.
The decline in bank deposits in FY21 and the concomitant increase in health expenditure may result in further increase in household debt to GDP ratio in FY22, as per the report, pencilled by Soumya Kanti Ghosh, the group chief economic adviser at State Bank of India (SBI). However, even at over 37 per cent, the household debt to GDP ratio is still lower than most other countries, he said. During the initial lockdowns in 2020, deposits of all commercial banks increased due to less avenues to spend. However, subsequently they declined marginally in the festive months. The trend of deposits during the first wave (March-December 2020) of the pandemic as revealed by banks for 711 districts across all states/union territories shows deposit outflows from 112 districts at Rs 1.06 lakh crore.