Key Points
Concerns over rising household leverage may be uncalled for as the estimates of net financial wealth (NFW) of Indian households as a percentage of GDP at 97 percent as March 2023 is still higher than pre pandemic level of 85 percentage of GDP according to estimates in a research paper by RBI economists published in the latest RBI Bulletin...
As of March 2023, total household financial assets are estimated at Rs 363.8 lakh crore, equivalent to 135.0 per cent of the gross domestic product (GDP)..
In contrast, the outstanding liabilities amounted to 101.8 lakh crore, accounting for 37.8 percent of GDP..
The pandemic period witnessed a jump in the financial assets and NFW for the two-year period from March 2020 to March 2022 . In 2022-23, with the resumption of normal economic activities, the NFW also normalised due to a strong revival in both bank and non-bank lending to households coupled with a relatively moderate growth in financial assets, the authors said...
With overall household savings declining to 18.4 percent of GDP in FY:2022-23 from an average of 20.0 per cent of GDP over 2013-2022, and coupled with an increasing trend in financial liabilities, household debt warrants close monitoring from a financial stability perspective the Reserve Bank of India said in its latest Financial Stability Report.. many economists have expressed concerns about the net financial savings of Indian households falling to a multi-decade low as financial liabilities have increased which could impact economic growth and stability..
