Mumbai - At a low under 10% of GDP, the household debt in the country is not increasing and there is no cause for any concerns over it, says a report.
“There has been of late a lot of brouhaha over the increasing household leverage in the country. However, such fears are largely unsubstantiated by hard facts which is only 9-10%," SBI Research said.
Though it is true that the household savings rate has declined to 30% in FY17 from a peak of 36.8% in FY08, it is wrong to conclude that this has led to a surge in household debt," it added.
The household debt is low and stagnant during the past few years hovering around in the range of 9-10% of GDP, it said.
The report explained that the problem in the household debt composition is of debt structure, pointing out that non-institutional sources like landlords, money lenders and friends and relatives still play an important role in financing household debt.
Credit from institutional sources accounted for only 3.72% of the overall household debt to GDP of 9.89%, while the rest 6.17% came from the non-institutional sources, it said.
In what can be seen as a positive news, it said the real debt for households is stagnant. In FY18, household financial liabilities increased to 5.63% from 3.33%, suggesting partly the large scale opening of the Jan-Dhan accounts thus changing financial behavior of households.
"This will clearly mean a decline in household debt from non-institutional sources in the coming years," it concludes.