Household debt, financing today against tomorrow
Household debt in India has risen to 45.5% of GDP as of September 2025, driven by an increase in personal loans and credit card usage. While savings have shown some recovery, the shift toward financing consumption through debt raises concerns about long-term financial stability.
Why it matters
Rising household leverage in an economy with uneven income growth poses potential risks to financial stability and future consumer spending power.
Household borrowing is becoming an integral part of everyday consumption. Credit cards, personal loans, consumer durable loans, digital lending and buy-now-pay-later arrangements have expanded the possibilities of bringing future income into the present. The latest evidence points to a significant expansion of household leverage. According to the Reserve Bank of India (RBI), as of September 2025, India’s household debt stood at 45.5% of its gross domestic product (GDP). In June 2023, the debt had been around 42% of GDP. The household debt had stood at 39.2% in March 2021. While this remains relatively modest compared with several emerging market economies, the composition and pace of household borrowing deserve closer attention.
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