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MOSL: ECOSCOPE: India’s debt growth accelerates in 4QFY22; Corporate debt grows at an 11-quarter high

 

• India’s non-financial sector (NFS) debt grew at a 13-quarter high of 12.7% YoY in 4QFY22/1QCY22 (quarter-ending Mar’22), v/s 11.9% YoY in 3QFY22. Outstanding NFS debt touched USD5.3t (or INR401t) in 4QFY22. Further, NFS debt stood at 169.4% of GDP in FY22, down from its peak of 179.6% in 4QFY21 but higher than 157.9% in 4QFY20.
• In real terms, however, total debt rose 6% YoY in 4QFY22, similar to the growth seen in the previous few quarters. The growth rate was also lower than the average growth of 8% between FY16 and FY19.
• Within NFS debt, non-government non-financial (NGNF) debt grew at three-year high of 11.4% YoY in the quarter, while general government (GG) debt (Center + states) posted the slowest growth in two years at 14.1% YoY in 4QFY22. Within the NGNF sector, (non-financial) corporate debt is estimated to have increased at an 11-quarter high of 8.7% YoY in the quarter, although household (HH) debt continued to rise strongly at 15% in 4QFY22.
• An analysis of NGNF debt by sources/lenders suggests that while the pick-up was broad-based, bank lending and bond issuances grew significantly faster than the previous quarter and the corresponding quarter a year ago. NBFC loan book, however, continued to post slow growth in 4QFY22 and commercial papers declined for the 9th time in the three years.
• A comparison of India’s NFS debt vis-à-vis a few other major economies confirms that while debt-to-GDP had peaked out in all nations in 4QCY20/1QCY21 (except Japan), the debt ratio at the end of 4QFY22/1QCY22 remained much higher than the pre-COVID level (CY19-end). The incremental rise in India, however, is the least compared to others.