Southern states have more household indebtedness than rest of India: Report
Among the major states, Uttarakhand had the lowest proportion of household indebtedness, while it was Chhattisgarh in urban areas
Household indebtedness in southern states is higher as compared to the other parts of the country. India Ratings through the All India Debt and Investment Survey (AIDIS) data from 2013-2019 said that household indebtedness both in rural and urban areas was higher in southern states as against the rest of India. Telengana had the highest proportion of its rural households indebted with 67.2% in 2019, while Nagaland had the lowest proportion of its rural households indebted at 6.6%.
It said that Kerala with 47.8% of urban households indebted had the highest incidence of indebtedness among the urban households and Meghalaya with the lowest at 5.1%.
Among the major states, Uttarakhand had the lowest proportion of household indebtedness, while it was Chhattisgarh in urban areas.
Though the per capita income in southern states was higher than other states of the country, but a higher indebtedness in both rural and urban households in these states may appear counterintuitive.
Pandemic aggravated household indebtedness
According to the report, with the exception of Kerala, a higher incidence of indebtedness in both rural and urban households in southern states did not reflect either a high average amount of debt per indebted household or a high average value of assets per rural household, these states had a high debt to asset ratio in 2019.
Andhra Pradesh, Kerala, Tamil Nadu and Telangana were the four southern states, figured among the five states having the highest debt to asset ratio both for rural and urban households. The fifth state Karnataka had a debt to asset ratio higher than all India average both for rural and urban households. It pointed out that not only a higher proportion of households in southern states are indebted, but they were also more leveraged.
Due to the impact of the Covid-19 pandemic, household indebtedness has aggravated lately, it said. And also added that RBI data already indicated that the household debt to GDP ratio increase to 37.9% in the third quarter of FY 21 from 33.8% in the fourth quarter of FY 20.