NEW DELHI: Is India heading towards a decade where consumer debt could outpace corporate debt? A look at the numbers shows that well might be the scenario in future. According to TransUnion CIBIL-SIDBI’s MSME Pulse Report, total debt in India, which includes debt of the government, corporate entities and individual borrowers, has increased at a compounded annual growth rate (CAGR) of 13.3 per cent to reach Rs 253 lakh crore in the five-year period from March 2015-2019.
Among the debt components, lending to individuals is seen to have more than doubled in the past four years, to be the largest contributor to growth in aggregate debt.
The growth in aggregate debt in the past four years is powered by 22 per cent CAGR growth on lending to individuals (including consumer loans, business loans to individuals and other loans); 13.4 per cent CAGR of lending to commercial entities (MSMEs and corporate entities) and 10.6 per cent of government debt.
The report also notes that lending to state governments has expanded much more rapidly than the Central government’s debt. Off-balance sheet liabilities of state and Central governments were, however, not captured for the study.
Growth of individual lending contribution is much starker when viewed in comparison to the GDP. Total individual lending growth as a percentage of GDP has moved from 19 per cent in March 2015 to 27.7 per cent in March 2019; however, it has changed from 31.1 per cent to 33.7 per cent for commercial lending. It is important to note that government debt as a percentage of the total GDP has reduced slightly from 73.1 per cent to 71.8 per cent.
Rise in individual lending
Lending to individuals more than doubled in the last four years, to be the largest contributor to growth in aggregate debt. Total individual lending growth as a percentage of GDP has moved from 19 per cent in March 2015 to 27.7 per cent in March 2019.