Context:
RBI data (2019-20 → 2024-25) shows Indian households’ annual financial liabilities have grown at double the pace of annual financial assets creation.
Key Highlights:
Data Trends – Assets vs Liabilities Growth
- Financial assets added/year: ↑ 48% (₹24.1 lakh cr in 2019-20 → ₹35.6 lakh cr in 2024-25)
- Financial liabilities added/year: ↑ 102% (₹7.5 lakh cr in 2019-20 → ₹15.7 lakh cr in 2024-25)
- Assets as % of GDP → 12% (2019-20) → 10.8% (2024-25) – lower than pre-COVID
- Liabilities as % of GDP → 3.9% (2019-20) → peaked 6.2% (2023-24) → 4.7% (2024-25)
Changing Composition – Savings Shift
- Bank deposits remain dominant but moderate: share ↑ 32% → 33.3%
- Absolute deposits ↑ ₹7.7 lakh cr → ₹11.8 lakh cr
- Mutual funds surge: share ↑ 2.6% → 13.1%
- New MF investments ↑ 655% → ₹4.7 lakh cr (2024-25)
- Currency share in assets fell 11.7% → 5.9%
- Life insurance / PF / Pension funds – largely stable shares
Concerns:
- Higher leverage → risk of household balance sheet stress
- Asset growth slowing → weak wealth creation momentum
Relevant Prelims Points:
- Household sector = largest net financial surplus sector of Indian economy (RBI)
- Household liabilities include – housing loans, personal loans, credit cards, gold loans
Relevant Mains Points:
- Macro link → household financial savings is a key driver of domestic resource mobilisation
- Post-COVID behaviour: shift from low-risk deposits to market-linked MF products → reflects financialisation of savings
Way Forward: targeted financial literacy + safe debt norms + diversified retail investment channels