The COVID-19 pandemic has resulted in a spike in family debt to the GDP charge. As per the report, it rose sharply to 37.3 per cent in 2020-21 from 32.5 per cent in 2019-20.
“We estimate that family debt as a proportion of GDP has declined to 34 per cent in Q1 FY22 with the commensurate rise in GDP within the first quarter, although it has elevated in absolute phrases,” the analysis report launched on Wednesday confirmed.
In absolute numbers, the family debt has elevated to Rs 75 lakh crore within the first quarter of FY22 from Rs 73.59 lakh crore in FY21, it stated.
It stated the not too long ago launched India Debt & Funding Survey (AIDIS) report for 2018 confirmed a rise within the common quantity of debt amongst rural in addition to city households between 2012 and 2018.
The common quantity of debt elevated by 84 per cent and 42 per cent, respectively, for rural and concrete households for the six-year interval ended 2018, the SBI analysis report stated.
The state-wise pattern signifies that the agricultural households’ common debt greater than doubled in 18 states for the six-year interval ended 2018, whereas seven states witnessed the identical for city households.
Importantly, 5 states, together with Maharashtra, Rajasthan and Assam, witnessed a simultaneous doubling in common debt throughout city and rural households throughout this era, the report stated.
As per the AIDIS report 2018, the common quantity of debt amongst rural households stood at Rs 59,748 and in city households, it was Rs 1.20 lakh.
“In 2021, the agricultural family debt is anticipated to extend to Rs 1.16 lakh and concrete to Rs 2.33 lakh, indicating that COVID impacted the households considerably,” based on the SBI analysis report.
It stated the debt-asset ratio, which is an indicator of family indebtedness, has elevated to three.8 in 2018 from 3.2 in 2012 for rural households. For city households, the ratio has risen from 3.7 to 4.4.
Kerala, Madhya Pradesh and Punjab have been the three states that witnessed a deterioration of at the least 100 bps (foundation factors) in debt asset ratio over the six-year interval ended 2018, the report stated.
“The great factor is that in rural India, the share of excellent money debt from non-institutional credit score companies has declined considerably to 34 per cent in 2018 from 44 per cent in 2012,” it famous.
Notably, virtually all states have registered a steep decline in non-institutional credit score in rural areas, indicating the rise in formalisation of the financial system, the report stated.
The share of non-institutional credit score has declined considerably within the case of Bihar, West Bengal, Rajasthan, Haryana and Gujarat. In Haryana and Rajasthan, which witnessed mortgage waiver schemes, the share of non-institutional credit score declined opposite to widespread notion, it stated.
“This could possibly be defined by a major enhance in penetration of KCC (Kisan Credit score Playing cards) in these two states. Our estimates present that the variety of KCC playing cards has jumped by 5 occasions over the 7 12 months interval ended 2020,” the report stated.
The report believes that the latest reforms in agriculture may additional assist in the formalisation of the financial system, regardless of the political cacophony.