Buried inside the Global Financial Stability Report of the IMF (September 2006) is a graph showing India and New Zealand as the outliers in terms of high financial leverage in the household sector, but the data does not seem right. Figure 2.10 on page 55 shows Indian household leverage (ratio of financial liabilities to financial assets) as about 60%, exceeded only by New Zealand’s 80%. India does not publish sectoral balance sheets, but the flow of funds data is grossly at variance with this number of 60%. If we cumulate the last several years’ change in financial assets, liabilities and physical assets from Tables 10 and 11 of the RBI’s Handbook of Statistics, 2005, the following picture emerges. Cumulative household financial savings are about 100% of GDP, cumulative household financial liabilities are about 20% of GDP and cumulative household physical savings are about 80% of GDP. This would imply household leverage of 20/180 or about 11%. This broad picture does not change whether I cumulate the last 35 years of data or just the last 10. I am struggling to understand how the IMF gets a number more than 5 times this estimate of about 11%. If one considers that most household assets (equities, real estate or gold) would have appreciated in value over the years while most liabilities would be fixed in nominal terms, the financial leverage evaluated at market prices must be even lower than the above estimate of 11%. Of course, the IMF says that it got the number from national authorities. So does the RBI/MOF/CSO see some household leverage out there that we are not seeing? Or is it all a mistake?