Houshold liabilities surge by Rs 6,00,000 crore to Rs 83,65,000 crore in FY22

Liabilities of households rose by Rs 6,00,000 crore in 2021-22 to Rs 83,65,000 crore, data from the Reserve Bank of India (RBI) shows.  

This was even as household debt as a share of GDP came down from 39.3 per cent in 2020-21 to 35.3 per cent in 2021-22. The rise in the liabilities suggests that people may have borrowed to spend on basic needs such as medical expenses during the pandemic and also to pay off any past loans.  

Analysts point out that the rise in household debt was probably due to the deteriorating financial position of the MSME sector which accounts for a big share of households. The levels of debt, economists said, while not alarming, are nonetheless higher than the pre-pandemic levels.  

The debt levels should be watched because interest rates have risen sharply over the past six months, whereas the economic environment has not seen a very big improvement. 

In an expected trend, the net financial assets of households fell to 8.3 per cent of GDP in FY22 from 12 per cent in FY21.

As experts have pointed out, consumption was constrained during the pandemic by limited mobility, and consumers were compelled to save.

With life more or less back to normal in the second half of 2021-22, expenditure too normalised with pent-up demand being released. This is clearly reflected in the numbers with assets falling by Rs 6,00,000 crore or 19 per cent over 2020-21.

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