Low debt aids consumption-driven economic growth.

A very high debt can curtail consumption when interest rates are high and consumers become reluctant to borrow.

Unsold inventory leads to production cuts & creates unemployment.

India: 11.2%

Russia: 16.5%

Brazil: 26.7%

South Africa: 33%

China: 50.3%

Bank Lending 2013-14 2018-19 Consumer durables 0.23% 0.04% Housing loans 9.47% 13.13% Credit cards 0.45% 1.05% Education 1.09% 0.86% Vehicle loans 1.92% 2.46% Personal loans 3.61% 6.90%

Household debt has jumped significantly in 2017-18, helped by the banking sector’s rising focus on retail lending. ET Wealth looks at the sectors where consumer debt has grown or declined over the years.India’s household debt surged 1.8 times from Rs 3.7 lakh crore to Rs 6.74 lakh crore between 2016-17 and 2017-18. It grew at an annualised rate of over 13% in the past 5 years.2013-14: Rs 3.59 lakh crore2014-15: Rs 3.77 lakh crore2015-16: Rs 3.91 lakh crore2016-17: Rs 3.75 lakh crore2017-18: Rs 6.74 lakh croreThe rising debt it is not alarming. It is still the lowest among most of the emerging economies.Household debt as % of GDPSource: Tradingeconomics.com, Bank of International Settlements. Data for June 2018 quarter.In bank lending, share of personal loans and credit cards have shown a substantial jump.Figures as % of banks credit to non-food sector.Consumer durable loans witnessed a slowdown in 2018-19 as lenders feared likely defaults on such unsecured loans.Multiple credit card usage contributed to an increase in the financial liabilities of the households.Rising interest rates, NBFC crisis and low auto sales during festive season affected vehicle loans growth in 2018-19.Housing loans maintained moderate growth. However, rising interest rates impacted buyer sentiments in 2018-19.Banks hesitate to grant education loans due to the rising defaults and lack of margin requirements for loans up to Rs 4 lakh.Personal loans grew at the fastest pace. Households use such loans for funding their travel plans, weddings and repaying debt.Note: *Up to Nov 2018. % figures are year-on-year growth. Loans are outstanding loans.Data source: RBI