Avg urban household debt soared 620% in 10 years
Subodh Varma
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Outpaced Rise In Value Of Home Assets
With everything from a pair of jeans to a nose job available on EMIs these days, it's no surprise that the average Indian family is deeper in debt now than ever before. Though a household's assets have become more valuable over the past decade, its debts too have grown at times outpacing the former.In rural India where people borrow from both financial institutions and moneylenders, the average debt per rural household jumped from Rs 7,539 in 2002 to Rs 32,522 in 2012 -a hike of over 330% after adjusting for inflation. In urban areas, the average debt zoomed from Rs 11,771 in 2002 to Rs 84,625 in 2012, an inflation adjusted jump of nearly 620%.
Household debt varies widely across states: The southern states are the most indebted; over 40% rural households and over 30% urban ones live in debt.
Odisha, however, tops the debt tally . Richer states like Punjab and Haryana and those at the bottom of the economic pile have a more balanced household economy .
In Delhi, average asset value has exploded -from Rs 5.7 lakh in 2002 to nearly Rs 25 lakh in 2012. But so has its average debt -from Rs 1,441to Rs 33,130.
Both have been driven up by sky-high real estate prices in the past decade.
This data of household finances evolving in a globalizing economy emerge from a recently released National Sample Survey Organisation (NSSO), carried out in 2012-13.
Compared to 2002, the share of indebted households increased from 27% to 31% in rural areas and from 18% to 22% in urban areas, in 2012. In Telangana, the share is a shocking high of 59% in rural areas.
Richer states -Haryana, Punjab, Kerala, Gujarat, Maharashtra -have large household assets in both rural and urban areas. Himachal and J&K also fall in this category -being states where land ownership is more evenly distributed historically. The lowest assets are, ex pectedly , among poorer sta tes of Odisha, Bihar, Assam, Jharkhand and West Bengal.Andhra's the odd man out among the bottom rankers.
Trends in the growth of debt and assets can be seen in one parameter -the debt to asset ratio (DAR). If debt rises faster than value of assets, DAR increases. People rush to borrow but are losing value. A falling DAR means family budgets are healthier.
DAR in Bengal, Chhattisgarh, Maharashtra and MP's dipped since 2002, while Jharkhand and Punjab exhibit no change. Across India, DAR's increased marginally in rural areas from 2.8% to 3.3%; in urban areas from 2.8% to 3.7% between 2002 and 2012.
Household debt varies widely across states: The southern states are the most indebted; over 40% rural households and over 30% urban ones live in debt.
Odisha, however, tops the debt tally . Richer states like Punjab and Haryana and those at the bottom of the economic pile have a more balanced household economy .
In Delhi, average asset value has exploded -from Rs 5.7 lakh in 2002 to nearly Rs 25 lakh in 2012. But so has its average debt -from Rs 1,441to Rs 33,130.
Both have been driven up by sky-high real estate prices in the past decade.
This data of household finances evolving in a globalizing economy emerge from a recently released National Sample Survey Organisation (NSSO), carried out in 2012-13.
Compared to 2002, the share of indebted households increased from 27% to 31% in rural areas and from 18% to 22% in urban areas, in 2012. In Telangana, the share is a shocking high of 59% in rural areas.
Richer states -Haryana, Punjab, Kerala, Gujarat, Maharashtra -have large household assets in both rural and urban areas. Himachal and J&K also fall in this category -being states where land ownership is more evenly distributed historically. The lowest assets are, ex pectedly , among poorer sta tes of Odisha, Bihar, Assam, Jharkhand and West Bengal.Andhra's the odd man out among the bottom rankers.
Trends in the growth of debt and assets can be seen in one parameter -the debt to asset ratio (DAR). If debt rises faster than value of assets, DAR increases. People rush to borrow but are losing value. A falling DAR means family budgets are healthier.
DAR in Bengal, Chhattisgarh, Maharashtra and MP's dipped since 2002, while Jharkhand and Punjab exhibit no change. Across India, DAR's increased marginally in rural areas from 2.8% to 3.3%; in urban areas from 2.8% to 3.7% between 2002 and 2012.
Source: Times of India, 22-02-2016
