India Debt Crisis: Indian families are taking more loans than ever, especially during festivals and shopping time. Money influencer Neha Nagar said, “70% of iPhones in India are purchased through loans, while 80% of cars are financed via EMIs.” This shows that because credit is easy to get and people want more things, many are spending more money than they actually earn.
IMDb’s Most Anticipated Indian Movies of 2025: De De Pyaar De 2, Thamma and More
Experts say borrowing is not always bad, but it depends on how loans are used. Finance author Robert Kiyosaki, known for Rich Dad Poor Dad, explains, “The wealthy use loans as leverage to build assets. The poor and middle class often use them to buy liabilities.” Many middle-income Indians are stuck paying EMIs for gadgets and cars that lose value, instead of investing in assets that grow wealth over time.
Good Loans vs Bad Loans
A good loan is one that creates value and increases future earnings. These include education loans for skill-based programs, home loans for properties that gain value, business loans to grow revenue, and upskilling loans for certifications that improve jobs. Such loans turn borrowed money into future gains. On other hand borrowing for luxury items like phones, holidays or other consumption adds no real value and can trap people in debt.
As Nagar warns, “Debt itself isn’t the enemy — ignorance is.”
RBI Data Shows Rising Household Debt
The Reserve Bank of India (RBI) warned about growing household debt in its Financial Stability Report (December 2024). Household debt-to-GDP rose from 26% in June 2015 to 41.9% in December 2024. More than half of the debt, 54.9%, is now non-housing retail loans like credit cards, personal loans, and consumer durables. Housing loans have dropped to 29% from 36–37% in FY19. Personal and consumption loans grew at a compound annual rate of 20.4% between March 2021 and March 2025, reported Business today.
While non-performing assets in consumer lending are low at 1.4%, savings in India fell to a 47-year low of 5.3% of GDP in FY23. Rising loan-to-value ratios and sub-prime lending risks prompted RBI to raise risk weights on unsecured loans to 125% in November 2023. Yet theper capita household debt increased from ₹3.9 lakh in March 2023 to ₹4.8 lakh by March 2025.
WHO issues alert against substandard oral cough syrups in India
Consumption-Driven Borrowings
The iPhone-on-EMI trend is a symptom of a bigger problem. Many Indians are financing wants faster than building wealth. Experts warn that unless borrowing shifts toward productive value-creating loans and India’s growing credit-driven consumption could lead to a debt crisis in the future.
