Statsguru: Five charts explain India's household balance sheet

The National Sample Survey Office recently released the All India Debt and Investment Survey (AIDIS) report, which measures the levels of assets and liabilities of households. This is the sixth report of its kind — the exercise began in 1971. Though the successive surveys and their results are not strictly comparable, we look at how assets and debt grew over the last few decades.

In rural areas, the average value of assets owned by a household grew 15 times since the economic reforms began in 1991. But the average outstanding debt grew 31 times, or twice as fast, during the same period (chart 1).

The latest data pertain to 2018. This rise in debt levels more than assets could mean that households borrowed money to spend on recurring things such as health expenses, marriages, education, and so on.

Even among urban households, debt grew at a faster pace. But the average value of assets grew a bit more than in villages (chart 2).

Note: Growth in nominal terms. Successive reports have some differences in the way assets and debts are recorded. While this may not be accurate, the data shows an indicative movement in debt vis-a-vis assets; Source: All India Debt and Investment Surveys, 1992, 2002, 2013, 2019

The jump between 2002 and 2012 is worth noting.

Chart 3 consists of four sub-charts, each showing the growth in average assets and debt for four classes of households. For farmers (defined as cultivators in the survey), asset value grew six times, but average debt grew eight times in 16 years. For predominantly labourers (non-cultivators), assets grew faster than farmers, with the gap between asset and debt growth nearly converging.

Debt grew fastest for the urban households that sustain on self-employment: Most of them could be small shop owners such as tea and snack sellers.

With the rising trend of formalisation in the economy, household liabilities are also turning formal. The share of rural households with non-institutional debt was higher than those with institutional debt in 2012. The situation reversed in 2018 (chart 4). Institutional finance is replacing informal finance in urban areas as well.

The successive reports also show that interest rates on loans have gene­rally reduced. But with that, more and more households are being char­ged compound interest than simple interest (chart 5).

StatsGuru is a weekly feature. Every Monday, Business Standard guides you through the numbers you need to know to make sense of the headlines