According to the report by SBI Research, household debt has sharply climbed to 37.3 percent of the Gross domestic product (GDP)  in the pandemic year from 32.5 percent in FY20, says a report, confirming the deeper financial impact of COVID-19. It also warned that the ratio may rise further this fiscal due to the second wave of the pandemic.

In fact, household debt has been steadily increasing ever since the GST implementation in July 2017, which was preceded by demonetisation in November 2016. In four years since FY18, the household debt has jumped by 720 bps i.e from 30.1 percent in FY18 which was the year of GST implementation, to 31.7 percent in FY19, 32.5 percent in FY20 and to a massive 37.3 percent in FY21, according to the report by SBI Research on Monday.

Household debt includes retail loans, crop loans and business loans from financial institutions like banks, credit societies, non-banks and housing finance companies. The decline in bank deposits in FY21 and the concomitant increase in health expenditure may result in further increase in household debt to GDP ratio in FY22, as per the report, pencilled by Soumya Kanti Ghosh, the group chief economic adviser at State Bank of India (SBI).

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Govt's total liabilities enhanced at Rs 116.21 lakh crore at end-March 2021