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The Indian Household Finance Landscape

Author

Listed:
  • Badarinza, Cristian
  • Balasubramaniam, Vimal
  • Ramadorai, Tarun

Abstract

Using the most recent wave of the All India Debt and Investment Survey data, we describe and attempt to explain several important features of Indian household balance sheets. When compared with data on households in a range of developed and emerging economies, Indian households, on average, tend to hold a high fraction of non-financial assets with particularly high relative weights in real estate and gold, hold negligible retirement assets, and rely on non-institutional debt as their primary source of debt. These propensities are also evident along the life cycle, as well as at almost all points in the wealth distribution, and correlated with location (rural versus urban), education, and family composition. Controlling for demographics, substantial state-level variation remains in asset and debt holdings which is related to state-level factors including historical inflation volatility, the share of the population in public sector employment, and the density of bank branch networks. We discuss the potential implications of these results for policy.

Suggested Citation

  • Badarinza, Cristian & Balasubramaniam, Vimal & Ramadorai, Tarun, 2017. "The Indian Household Finance Landscape," India Policy Forum, National Council of Applied Economic Research, vol. 13(1), pages 1-71.
    • Handle: RePEc:nca:ncaerj:v:13:y:2017:i:2017-1:p:1-71
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    File URL: https://www.ncaer.org/publication/india-policy-forum-2016-17
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    Citations

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    Cited by:

    1. Saibal Ghosh, 2020. "Access to and use of finance in India: does religion matter?," Indian Economic Review, Springer, vol. 55(1), pages 67-92, June.
    2. Sane, Renuka, 2019. "Stock market trading in the aftermath of an accounting scandal," Emerging Markets Review, Elsevier, vol. 40(C), pages 1-1.
    3. Rishabh Kumar, 2019. "The evolution of wealth-income ratios in India, 1860-2012," World Inequality Lab Working Papers hal-02876998, HAL.
    4. Kumar, Alok, 2023. "Financial market imperfections, informality and government spending multipliers," Journal of Development Economics, Elsevier, vol. 163(C).
    5. Balakina, Olga & Balasubramaniam, Vimal & Dimri, Aditi & Sane, Renuka, 2021. "Unshrouding product-specific attributes through financial education," Working Papers 21/344, National Institute of Public Finance and Policy.
    6. Havran, Dániel & Gosztonyi, Márton, 2021. "Karátos likviditásmenedzserek. Az arany ékszerek szerepe a háztartások likviditáskezelésében [Liquidity managers with carats. The role of gold jewellery in the liquidity management of households]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(11), pages 1141-1161.
    7. Singh, Nirvikar, 2018. "Financial Inclusion: Concepts, Issues and Policies for India," Santa Cruz Department of Economics, Working Paper Series qt98p5m37s, Department of Economics, UC Santa Cruz.

    More about this item

    Keywords

    Household Finance; Household Balance Sheet; International Comparisons; India; Gold; Indebtedness;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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