• UGI USER
  • Apr 09, 2024
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HOUSEHOLDS’ DEBT SURGED TO NEW HIGH BY DEC. 2023

Why in the news?

Household debt in India reaches 40% of GDP, while net financial savings drop to 5%, signalling rising financial distress.

source:slideserve
What is Household debt?

  • Household debt is the total amount individuals owe creditors.
  • Includes loans for consumer durables, housing, and personal expenses like education or medical bills.
  • Requires fixed payments of principal and interest in the future.

What is the Debt service ratio (DSR)?

  • Debt service ratio (DSR) measures the portion of household disposable income used to meet debt obligations.
  • Lower DSR suggests better sustainability and manageable debt.
  • Influenced by debt-to-income ratio, maturity/tenure, and effective interest rate.

source:

https://www.thehindu.com/business/Economy/households-debt-surged-to-fresh-high-by-december-2023-report/article68044023.ece#:~:text=In%20what%20may%20be%20construed,per%20a%20research%20report%20from