Southern states lead in household debt charts, Delhi least indebted: Mospi

Delhi least indebted; relative prosperity allows southern households to take bigger loans and service them

People in South India are comparatively more indebted than those in the rest of the country, according to a study published in the latest issue of the statistics ministry’s biannual journal Sarvekshana. Experts say this reflects the region’s greater prosperity, which allows households to take on higher debt and service it effectively. 

Data showed that more than two out of five people in Andhra Pradesh are indebted (43.7 per cent), followed by Telangana (37.2 per cent), Kerala (29.9 per cent), Tamil Nadu (29.4 per cent), Puducherry (28.3 per cent), and Karnataka (23.2 per cent). 

At the national level, the share of India’s adult population with outstanding debt stood at nearly 15 per cent in 2021. 

The study used unit-level data from the National Statistics Office (NSO) 78th round (2020–21) Multiple Indicator Survey (MIS).

“There exists a direct relationship between indebtedness and household economic status, and an inverse relationship between indebtedness and household size,” the study observed. 

Echoing similar views, Paras Jasrai, associate director at India Ratings & Research, said people in southern states have higher per capita incomes and more assets, combined with greater financial inclusion. This results in a higher incidence of indebtedness as well as greater household leverage in these states. 

“People there have high disposable incomes. Their credit-to-deposit ratio is also higher than the rest of the country. Hence, creditors are confident that loans will be serviced and have no hesitation in lending. However, the purpose for which these loans are taken could provide further insights into why indebtedness among southern households is relatively high,” he added. 

The study classified a household member as indebted if they had taken a cash loan of at least ₹500 from any institutional or non-institutional source that remained outstanding on the survey date. Indebtedness was measured for individuals aged 15 and above (adults). 

Among major states and Union Territories (UTs), Delhi (3.4 per cent) had the lowest indebtedness, followed by Chhattisgarh (6.5 per cent), Assam (7.1 per cent), Gujarat (7.2 per cent), Jharkhand (7.5 per cent), West Bengal (8.5 per cent), and Haryana (8.9 per cent). 

The study found no significant difference in indebtedness between rural (15 per cent) and urban populations (14 per cent). 

By caste, it was highest among Other Backward Classes (16.6 per cent) and lowest among Scheduled Tribes (11 per cent), with little variation across religious groups. 

It also showed that males who were ever married, living in upper-quartile households, and with smaller families were more indebted. 

“Substantially higher indebtedness was found among the self-employed, salaried/wage-employed, and casual wage labourers, and lower among those attending educational institutions, those not working but seeking or available for work, and those unable to work due to disability,” the study noted.