IGI Logo

India’s nominal debt growth accelerates in 1QFY23

but real growth remains subdued

* India’s non-financial sector (NFS) debt grew at a 15-quarter high of 13.8% YoY in 1QFY23 (quarter-ending Jun’22), v/s 13% YoY in 4QFY22. Outstanding NFS debt touched USD5.2t (or INR412t) in 1QFY23. Further, NFS debt eased to a nine-quarter low of 164.7% of GDP in 1QFY23, down from its peak of 179.7% in 4QFY21 but up from 157.9% in 4QFY20.

* In real terms (using GDP deflator), however, India’s debt grew a mere 2.7% YoY in 1QFY23, the highest in five quarters but substantially lower than the average growth of ~9% between FY16 and FY19.

* Within NFS debt, non-government non-financial (NGNF) debt grew at a 14-quarter high of 13.6% YoY in the quarter, while general government (GG) debt (Center + states) posted the slowest growth in two years at 14% YoY in 1QFY23. Within the NGNF sector, (non-financial) corporate debt is estimated to grow 12.5% YoY in the quarter, while household (HH) debt posted a 14-quarter high growth of 15.2% in 1QFY23.

* An analysis of NGNF debt by sources/lenders suggests that while the pick-up was broad-based. Barring commercial papers, all other sources witnessed double-digit growth in 1QFY23. SCBs loans to the NGNF sector grew at a 34-quarter high of 13.5% and non-bank lenders also saw a 13-quarter high growth of 13.8% YoY in 1QFY23.

* Based on monthly data of SCBs credit (loans + investments), CPs, and bonds (from Bloomberg), the combined nominal debt grew 12% YoY in Aug’22, marking its first double-digit growth in more than three years. In real terms (using the average of CPI and WPI), it is estimated to have increased 2% in Aug’22, after 15 months of contraction.

* A comparison of debt-to-GDP ratios in the world’s major economies confirms that the leverage had peaked out in most nations in 4QCY20/1QCY21, though it was at an all-time high in China & Japan in 2QCY22. Further, the debt ratio in India is the least compared to other major nations.

India’s NFS debt grew 13.8% YoY, eased to 164.7% of GDP in 1QFY23: Our

estimates suggest that India’s NFS debt stood at USD5.2t (or INR412t) in 1QFY23, up 13.8% YoY, marking the highest growth in 15 quarters (Exhibit 1). About half of the rise in NFS debt in 1QFY23 (vis-à-vis 1QFY22) was attributable to the government sector, lower than two-thirds in the past few quarters. As against 15-quarter high nominal growth, India’s debt grew just 2.7% YoY in 1QFY23 in real terms (using GDP deflator), the highest in five quarters, but substantially lower than the average growth of ~9% between FY16 and FY19 (Exhibit 2). Further, NFS debt eased to a nine-quarter low of 164.7% of GDP in 1QFY23, down from its peak of 179.7% in 4QFY21 but higher than 157.9% in 4QFY20 (Exhibit 3).

To Read Complete Report & Disclaimer Click Here

For More Geojit Financial Services Ltd Disclaimer https://www.geojit.com/disclaimer 

SEBI Registration Number: INH200000345

Views express by all participants are for information & academic purpose only. Kindly read disclaimer before referring below views. Click Here For Disclaimer