Economy Watch - India’s Debt Growth Accelerates Further In Q2 FY23: Motilal Oswal

Motilal Oswal Report

India’s non-financial sector debt grew at a 16-quarter high of 13.8% YoY in Q2 FY23/Q3 CY22 (quarter-ending Sep-22), versus 13.3% YoY in Q1 FY23.

Outstanding non-financial sector debt touched $5.2 trillion (or Rs 424 trillion) in Q2 FY23. Further, non-financial sector debt stood at 163.6% of gross domestic product in Q2 FY23, down from its peak of 179.5% in Q4 FY21 and 164.1% in Q1 FY23.

In real terms, however, total debt (using GDP deflator) grew just 4.1% YoY in Q2 FY23, the highest in the past seven quarters. However, it is still less than half the average growth of 8-9% YoY witnessed during the pre-Covid period.

Within NFS debt, non-government non-financial debt also grew at a four-year high of 16% YoY in 2QFY23, while government debt posted the slowest growth (of 11.6% YoY) in three years. Within the non-government non-financial sector, household debt spiked at 19.4% YoY in Q2 FY23, marking the highest growth in 38 quarters.

This was primarily led by non-mortgage debt, while corporate debt is estimated to have increased at a 16-quarter high of 13.5% YoY during the quarter.

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