Household Indebtedness 2012 Household Budget Survey Rajive Ajodhea 18 November 2013 1

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Household Indebtedness2012 Household Budget Survey

Rajive Ajodhea18 November 2013

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Debt Coverage

• At the 2012 Household Budget Survey, the

households surveyed were requested to state

the amount they had disbursed as repayment

of debt during the reference period

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Debt prevalence, 2012

Housing

Household appliances

Furniture

Motor vehicle

Audio-visual equipment

Education

Health

0 10 20 30 40 50 60 70

57.5

17.5

14.3

13.4

9.9

7.2

2.3

% of households

Item

of D

ebt

• Among indebted households, housing was the most common item of debt, followed by household appliances and furniture

• 45.3 % of the surveyed households reported having at

least one debt repayment

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Debt repayment, 2012

• On the average, an indebted household disbursed Rs 6,830 per

month on debt repayment in 2012

• The average household disposable income1 of an indebted household

was Rs 37,180 in 2012

• Debt repayment represents 18.4% of the disposable income of

indebted households

1Income from employment, property and transfer less income less taxes and social security contributions

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Debt repayment by item, 2012

• Housing was the item of

debt with the largest debt

repayment followed by

motor vehicle and

education.Housing

Motor vehicle

Education

Health

Furniture



0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000

6,690

5,960

5,470

2,650

1,510

1,300

1,210

Debt repayment (Rs)

Item

of d

ebt

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Components of household debt repayment, 2012

* Include furniture, audio-visual equipment and household appliances **include wedding, computer, mobile phone, solar water heater, personal loans and health

• Housing represented the largest share of debt repayment

Housing56%

Motor vehicle12%

Household durable*

8%

Education6%

Other debt**18%

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Indebtedness by income quintile of household, 2012

Income Quintile

Percentage of households

indebted

Average monthly debt repayment

(Rs)

Average disposable income of indebted

households (Rs)First Quintile 21.4 2,630 11,500

Second Quintile 37.3 2,910 18,190

Third Quintile 48.3 3,710 23,930

Fourth Quintile 56.4 5,580 33,530

Fifth Quintile 63.7 13,600 68,530

All households 45.3 6,830 37,180

• Prevalence of indebtedness increase with the income of household• Households in the fifth quintile are three times more likely to be

indebted than those in the first quintile, 63.7% against 21.4%• The monthly debt repayment among the fifth quintile was Rs 13,600,

five times higher than that among the first quintile

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Indebted households (%) by item of debt and quintile group of household income, 2012

Item of debt

First Quintile

Second Quintile

Third Quintile

Fourth Quintile

Fifth Quintile

All Households

Housing 36.0 50.2 53.8 62.0 67.7 57.5 Motor vehicle 2.6 4.0 8.1 13.2 25.9 13.4 Education 3.2 3.7 6.2 7.4 11.0 7.2

• Housing is the most common item of debt across all quintiles• However, the percentage of households who are indebted

on housing was 36.0 % for the first quintile compared to 67.7% for the fifth quintile

• Similarly a larger proportion of households in the higher quintiles had debts on motor vehicle and education than those in the lower quintile

• However……..

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Indebted households (%) by item of debt and quintile group of household income, 2012

Item of debt First Quintile

Second Quintile

Third Quintile

Fourth Quintile

Fifth Quintile

All Households

Furniture 20.4 18.8 13.5 15.8 9.1 14.3Audio-visual equipment 14.9 12.9 10.7 9.3 7.2 9.9

Household appliances 29.0 22.1 20.7 16.8 9.3 17.5

Other miscellaneous** 18.3 28.2 34.0 36.3 38.5 33.4

**Include wedding, computer, mobile phone, solar water heater and personal loans

• ……… households in the lower quintiles are more likely to be indebted on furniture, audio-visual and household appliances

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Debt repayment components - Comparison of first and fifth income quintile of households, 2012

Monthly debt repayment Rs 2,630 Rs 13,600

Debt component

Housing 36.4 % 57.9%

Motor Vehicle 1.6 % 15.1 %

Education 2.7 % 7.1 %

Furniture 7.4 % 1.8 %

Audio -Visual Equipment 4.8 % 1.0 %

Household Appliances 14.2 % 1.1 %

Health 2.4 % 0.9 %

Other 30.5 % 15.1 %

All items 100.0% 100.0%

First Quintile Fifth Quintile

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Debt repayment as a percentage of disposable income by quintile group of household income, 2012

• On average, an indebted households pay 18.4% of its disposable income as debt repayment

• Households in the first quintile allocate 22.8 % of the disposable income to debt repayment compared to 19.8 % for households in the fifth quintile

First Quintile

Second Quintile

Third Quintile

Fourth Quintile

Fifth Quintile

All households

0.0 5.0 10.0 15.0 20.0 25.0

22.8

16.0

15.5

16.7

19.8

18.4

Debt repayment

% of household

Qui

ntile

Gro

up

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Indebtedness- Comparison of first and fifth income quintile of households, 2012

% of households indebted 21.4 % 63.7 %


Monthly disposable income of indebted households Rs 11,500 Rs 68,530

Debt repayment as a % of disposable income 22.8 % 19.8 %

% of households indebted on

Housing 36.0 % 67.7 %



Furniture 20.4 % 9.1 %



First Quintile Fifth Quintile

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Debt prevalence by household type, 2012

• Couple with unmarried children are more likely to be indebted– Main item of debt is housing followed by household appliances.

• Single member households are least indebted.

• Main item of debt for all type of household is housing

Couple with unmarried children

One male parent with unmarried children

One female parent with unmarried children

Couple without children

Single member household

All types of households

0 10 20 30 40 50 60

55.9

44.8

32.1

29.9

12.9

45.3

% households indebted

Hou

seho

ld T

ype

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Indebtedness - Comparison of couple with unmarried children and couple without children, 2012

% of households indebted 55.9 % 29.9 %


Monthly disposable income of indebted hholds Rs 37,620 Rs 37,150

Debt repayment as a % of disposable income 19.6 % 19.6 %

% of households indebted on

Housing 60.9 % 56.9 %



Furniture 13.2 % 14.1 %



Couple with unmarried children

Couple without children

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Evolution of Household Indebtedness, 2001/02 to 2012

• There has been a slight drop in the proportion of indebted households in the past 10 years, from 47.6% in 2001/02 to 45.3% in 2012

• Housing remained the main item of debt over the last 10 years• Percentage of indebted households for housing increased from 43.1 % to 57.5%

over the past 10 years. During that period, ownership of housing unit increased from 90 % to 93 %

Housing

Motor vehicle

Furniture



All items

0.0 10.020.030.040.050.060.070.0

Indebted households (%) by item of debt, 2001/02, 2006/07 & 2012

20122006/07 2001/02

% of households indebted

Item

of D

ebt

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Evolution of debt repayment, 2001/02 to 2012

2001/02 2006/07 2012Increase

2001/02 – 2012 (%)

Average monthly debt repayment Rs 3,100 Rs 4,350 Rs 6,830 120.2 %

Average monthly disposable income-indebted household Rs 17,170 Rs 23,690 Rs 37,180 117.1%

Debt repayment as percentage of disposable income

18.1 % 18.4% 18.4%

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Evolution of debt repayment, 2001/02 to 2012(continued)

• Average debt more than doubled in the past ten years, i.e an increase of 120.2%

• After adjusting for inflation between 2001/02 and 2012, debt repayment increased by 23.3 %

• During same period, disposable income increased by 117.1%. The real increase in income was 21.6%, lower than the increase in debt repayment

• Debt repayment as a proportion of disposable income stood at 18.4 % 2012, against 18.1 % in 2001/02 – explained by the higher increase in debt repayment

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Evolution of debt repayment by item of debt, 2001/02 to 2012

Housing

Motor vehicle

Furniture



All items

0 1000 2000 3000 4000 5000 6000 7000 8000

Average monthly loan repayment by item of debt, 2001/02, 2006/07 & 2012 HBS

20122006/07 2001/02

Debt repayment (Rs)

Item

of D

ebt

• The increase in debt repayment in the past ten years was highest for housing (140%), followed by motor vehicle (106%)

• Debt repayment on furniture, audio-visual equipment and household appliances increased by around 50% during the same period

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Debt repayment on education and health, 2006/07 - 2012

• The average debt repayment on education rose by 50%, from Rs. 3,580 in 2006/07 to Rs 5,470 in 2012

• Average monthly debt repayment on health amounted to Rs 2,700 in both 2006/07 and 2012. However, the proportion of indebted households with a debt on health increased from 0.7% to 2.3% during the same period

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Average monthly debt repayment by quintile group of household income, 2001/02 and 2012 HBS

• Households in the fifth quintile had the highest increase in debt repayment (33.6%), followed by households in the first quintile (28%)

• The lowest increase in debt repayment was observed among households in the third quintile

Quintile Group

Average monthly debt repayment by indebted households (Rs)

2001/02 2012 Real increase (%) in

debt repayment 2001/02-2012

First Quintile 1,150 2,630 28.0Second Quintile 1,360 2,910 19.3Third Quintile 1,990 3,710 4.3Fourth Quintile 2,750 5,590 13.9

Fifth Quintile 5,700 13,600 33.6

All households 3,100 6,830 23.3

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Debt repayment as a percentage of disposable income

Quintile GroupDebt repayment as percentage of

disposable income Percentage increase from 2001/02 -

20122001/02 2012 Debt Repayment Disposable

IncomeFirst Quintile 18.7 22.8 128.6 87.4Second Quintile 14.8 16.0 113.0 96.0Third Quintile 16.5 15.5 86.2 98.3Fourth Quintile 17.2 16.7 103.4 110.1Fifth Quintile 19.7 19.8 138.6 137.3All households 18.1 18.4 120.2 117.1

• Debt repayment as a percentage of disposable income increased for the first and second quintiles, the increase being higher for the first quintile

• The increase in the debt repayment for these two quintiles was higher than that of their disposable income

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Thank you

Documents

Household Indebtedness 2012 Household Budget Survey Rajive Ajodhea 18 November 2013 1