New Delhi: The sharp increase in household debt in the financial year which was hit by a pandemic 2020-21 was a worrying feature that showed an increase in debt voltage, a report by the Bank of State India (SBI) economist said on Monday.
Household debt as a percentage of gross domestic product (GDP) jumped from 32.5 percent in FY20 to 37.3 percent in FY21, especially due to adverse financial impacts caused by Covid-19 pandemic.
Debt has been calculated after taking into account retail loans, plant loans and business loans from financial institutions such as commercial banks, credit communities, non-banking finance companies (NBFC) and household financing companies (HFC), the report said.
It was also warned that the ratio could rise further fiscal because of the second wave of pandemic.
Constant revival at the level of household debt, the debt burden on households continues to increase since FY18.
It should be noted that 2017 also the year when the goods and service regime (GST) became implementation.
Since then, the debt level has increased almost 720 basis points (BPS).
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The increase in household debt in FY21 is worrying, the SBI report said
