MUMBAI: Indian households are currently experiencing a
financial paradox
: their net worth is at an all-time high, but so is their debt.
The net worth of Indian households has reached a record 157% of GDP in the first quarter of FY25, surpassing the previous high of 152.9% recorded in 4QFY21. This comes after a decline to a post-pandemic low of 138.7% of GDP in Q4FY23.
The household financial net worth surged to 150.7% of GDP in Q4FY24 and continued to rise in Q1FY25. Prior to the pandemic, it was approximately 123% of GDP.
This surge in wealth is primarily attributed to a significant increase in
financial assets
, particularly investments in equity and mutual funds. India’s
equity market cap
expanded to 146% of GDP in Q1 FY25 from around 105% a year ago.
However, there is a concerning rise in
household debt
, which now stands at a record 42% of GDP according to a report by
Motilal Oswal
. The increase in debt is from 35% of GDP immediately before the pre-pandemic.
