The Wire Staff 
New Delhi: India’s household debt levels reportedly touched an all-time high of 40% of the Gross Domestic Product by December 2023, The Hindu has reported, based on a note from the financial services firm Motilal Oswal. Net financial savings appear to have dropped to their lowest, at 5% of the GDP, the report says.
This, the report says amounts to a sign of financial distress rising.
As The Wire had noted in September 2023, the Reserve Bank of India’s data had it that net financial savings of households fell to a nearly five-decade low of 5.1% of GDP in FY23, down from 7.2% in FY22. In addition, annual financial liabilities of households rose sharply by 5.8% of GDP compared with 3.8% in FY22.
This indicated that households have been largely borrowing to fulfil their consumption needs.
However, the finance ministry had denied this and said that households are borrowing to buy real assets like homes and vehicles – and that this was not a sign of distress.
The Hindu, however, notes in its report that the first revised estimates of national income for 2022-23 published in February, raised the estimated net financial savings in households to 5.3% of GDP. But this was still the lowest in 47 years.
Motilal Oswal’s report said that weak income growth, robust consumption and growth in physical savings are responsible for the net financial savings numbers.