Outstanding Debt Of Non-financial Sector At 167.3% Of GDP

According to EcoScope report of Motilal Oswal Financial Services, the outstanding debt of India's non-financial sector (NFS) stood at Rs 322 trillion or 167.3 per cent of GDP in 1QFY21 (or 2QCY20), up from up from Rs 312 trillio in 4QFY20 and INR295t in 1QFY20.

The 9.1% YoY growth in NFS debt and 0.6% YoY decline in annualized nominal GDP led to a jump in NFS' debt-to-GDP ratio in 1QFY21.

Within NFS, general government (center + states) debt grew at a 30-quarter high pace of 14.3% YoY. Moreover, non-government non-financial (NGNF) debt grew 4.6% YoY in 1QFY21 (against record-low growth levels of 4% in 4QFY20). Within the NGNF sector, household debt grew at near-record lows of 6% YoY in 1QFY21 (8.9% in 4QFY20, but slowest growth of 5.7% in 4QFY09). Additionally, non-financial corporate (NFC) debt grew 3.7%, the second lowest to record-low growth levels of 1% in 4QFY20.

According to Motilal Oswal Financial Services, since the credit guarantee scheme in India was announced in mid-May'20 (later v/s other major nations), NGNF debt could grow faster in 2QFY21. Initial disbursement trends among certain lenders, such as HDFC Bank and HDFC Ltd., in 2QFY21 suggest strong improvement vis-à-vis 1QFY21. While these better performances by strong lenders could partly be the result of gaining market share, overall credit growth to the NGF sector is also likely to improve in 2QFY21.