New Delhi, April 25 || The households in India remain well positioned to support 6.5 per cent growth over the next 3-5 years, a Morgan Stanley report said on Friday.
Current household debt level in India is manageable and household debt (core) remains at levels lower than other economies, the report emphasised, adding that even as it rises, it expects the trend to be manageable driven by income growth.
The recent rise in retail loans has led to concerns on rising indebtedness at the household level. This has led to the narrative of higher household leverage, lower net financial saving, and patchy income growth, increasing distress in the household balance sheet.
According to the report, the rise in retail loans has been the key driver of credit growth post the pandemic, leading to concerns of over-leverage.
“To assess household debt, we believe that core household debt – which is the sum of personal loans (only to households) and credit extended by nonbank sources only to households – is a better metric to track, while the RBI follows a wider definition for household debt that also includes unincorporated enterprises,” said Bani Gambhir and Upasana Chachra from the India Economics team.