New Delhi, July 11 (IANS) Household credit extended heavily to 42.1 per cent of the gross domestic product (GDP) in FY24, which was steady in the range of 32 to 35 per cent during FY13 to FY20, a report revealed on Friday, showing growing optimism in the resilient economy.

This comes after a sharp increase in household financial liabilities post-pandemic period, according to the National Stock Exchange (NSE) market pulse report.

This growing credit footprint highlights increased financial access and confidence among households in the post-pandemic phase.

“Household credit has expanded meaningfully, from remaining stable at 32-35 per cent of GDP during FY13 to FY20 to witness a marked increase to 39.9 per cent in FY21 and further to 42.1 per cent in FY24,” the report stated.

The report also observed that net household financial savings, which saw an exceptional rise to 11.7 per cent of GDP in FY21 due to pandemic-induced caution and reduced opportunities for spending or borrowing, have gradually normalised. In FY24, savings stood at 5.2 per cent of GDP, according to the report.

This decline can partly be attributed to the decline in household financial liabilities, rising from 3.7 per cent of GDP in FY21 to 6.2 per cent in FY24.

“Post COVID, household financial liabilities have nearly tripled from Rs 7.4 lakh crore in FY21 to Rs 18.8 lakh crore in FY24,” according to the report.

The increase in the liabilities has compressed net financial savings from a peak of Rs 23.3 lakh crore in FY21 to just Rs 15.5 lakh crore in FY24.

The post-COVID developments in net financial savings and financial liabilities contributed to a substantial recovery in private consumption, with an average growth of 6.7 per cent during FY23-FY25.

The consumption growth is partly driven by a surge in household credit, according to the NSE market pulse report.

–IANS

aps/na