India’s household debt levels have touched an all-time high of 40% of Gross Domestic Product (GDP) by December 2023, as reported by The Hindu.

The newspaper says that net financial savings had likely dropped to their lowest level at around 5% of GDP. The findings are based on a research report from the financial services firm Motilal Oswal.

The report claims that these are a sign of financial distress rising and indicates that households have been largely borrowing to fulfil their consumption needs.

The Hindu quoted as, “ The first revised estimates of national income for 2022-23 published this February, raised the estimated net financial savings in households to 5.3% of GDP, which is still the lowest in 47 years, and weaker than the average of 7.6% of GDP recorded between 2011-12 and 2019-20. The revised estimates also scaled up household debt levels to 38% of GDP in 2022-23, second only to the 39.1% of GDP recorded in the pandemic-hit year of 2020-21.”

The report also suggests that weak income growth, robust consumption and growth in physical savings are responsible for the net financial savings numbers.