Household financial debt in India rises to 6.2% of GDP in FY24, while net financial savings decline, reflecting a shift towards higher borrowing and increased participation in equity markets.

Household financial debt jumps to 6.2% of GDP

According to a whitepaper shared by Client Associates Private Wealth Management, household financial debt has jumped to 6.2% of GDP as of FY24 compared to pre-pandemic average of 4.1%. Net financial savings has also reduced from 7.7% to 5.2% of GDP.

Indian households contribute nearly 60% of the national domestic savings averaging close to 20% of the GDP each year, making them the largest and most reliable source of domestic capital. Real estate investment increased to 12.8% of GDP in FY24, making it the biggest savings category.

The investment flows in stocks and mutual funds have also increased from about 4% of the financial asset flows in FY20 to an estimated 15% in FY25.

Personal and retail lending expanded at 17.6% CAGR from FY16 to FY25, at nearly twice the rate of nominal GDP expansion. Credit cards recorded the highest growth at 25.2% CAGR while personal loans are second at 20.1%.

While commenting on the whitepaper, Nitin Aggarwal, Director – Investment Research, Client Associates said, “Indian households have evolved beyond passive saving behaviour. They now function as active economic players who borrow to purchase assets, engage with financial markets, and influence how capital moves through the economy.”