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SBI Research in its latest report said that household debt has sharply jumped to 37.3 per cent of the Gross domestic product (GDP) in the pandemic year (FY21) from 32.5 per cent in FY20, confirming the deeper financial impact of COVID-19. It also warned that the ratio may rise further this fiscal due to the second wave of the pandemic.

In fact, household debt has been steadily increasing ever since the GST implementation in July 2017, which was preceded by demonetisation in November 2016. In four years since FY18, the household debt has jumped by 720 bps -- from 30.1 per cent in FY18 which was the year of GST implementation, to 31.7 per cent in FY19, 32.5 per cent in FY20 and to a massive 37.3 per cent in FY21.

However, it added India's household debt to GDP ratio is still lower than most other countries (highest at 103.8 per cent in Korea, 90 per cent in Britain, 79.5 per cent in the US, 65.3 per cent in Japan, 61.7 per cent in China, and the lowest in Mexico at 17.4 per cent). Household debt includes retail loans, crop loans and business loans from financial institutions like banks, credit societies, non-banks and housing finance companies.