During the one year of the Coronavirus Pandemic, the debt burden on Indian families has increased. According to the latest data from the Reserve Bank of India (RBI), loans to households have increased to 37.1 per cent of GDP in the second quarter of the current financial year. At the same time, the saving of families has come down to a low of 10.4 percent during this period. Millions of people have become unemployed due to the epidemic, while the salaries of a large number of people have been reduced. Due to this, people have had to take more loans or meet expenses from their savings.
According to the data, the share of households in the total debt market in the second quarter increased by 1.30 per cent to 51.5 per cent on an annual basis. According to the Reserve Bank’s March Bulletin, at the beginning of the epidemic, people were inclined towards saving. Due to this, the savings of households reached 21 per cent of GDP in the first quarter of 2020-21, but in the second quarter it came down to 10.4 per cent. However, this is higher than 9.8 percent in the second quarter of 2019-20.
Savings of families increase due to decline in the economy
Economists of the Reserve Bank say that the savings of families generally increase when the economy stops or falls. At the same time, when the economy improves, the savings decrease, because the confidence of people to spend increases. In this case, the savings of families reached 21 percent of GDP in the first quarter. At that time, there was a 23.9 percent decline in GDP. After that, the fall of GDP in the second quarter was reduced to 7.5 percent. At the same time, people’s savings came down to 10.4 percent.
The Reserve Bank said that a similar trend was seen during the global financial crisis in 2008-09 as well. At that time, household savings had risen to 1.70 percent of GDP. Later, with the improvement in the economy, savings also began to decrease.
Debt on families increasing since FY19
The Bulletin states that the debt-to-GDP ratio of families has been steadily increasing since the first quarter of 2018-19. Household loans reached 37.1 per cent of GDP in the second quarter of the current financial year, up from 35.4 per cent in the first quarter. The loan share of households in the total debt market also rose by 1.3 per cent to 51.5 per cent in the second quarter.
read this also- Do this work in 10 days, otherwise, your PAN card will be useless, there may be loss of 10 thousand
read this also- Bank can get money by FD, till 23 March money can be invested
