India’s household debt reached 41.9% of GDP by December 2024—below the emerging-markets average, yet showing signs of stress. Notably, retail segments like credit cards and microfinance are experiencing rising delinquencies amid aggressive lending practices . Despite healthy GDP growth forecasts (6.5–6.7% in FY2026–27), the Reserve Bank of India has deployed significant monetary stimulus—cutting repo and reserve requirements. This reflects concern that households, particularly those relying on unsecured debt and credit cards, may be under financial strain, with savings rates declining and debt-to-GDP climbing from ~36% to ~42% in two years .

The Financial Times highlights a middle-class debt crisis, where household debt now stands at 43% of GDP—its highest in decades—while savings plunges to 50‑year lows. Regulatory steps like raising risk weights on personal loans have been taken, but microfinance delinquencies and predatory lending persist .Further evidence of cracks in the consumption-driven growth model: consumer spending—about 60% of GDP—has plateaued since March 2023. This suggests rising debt burdens, stagnant incomes, and reduced discretionary spending are limiting India’s economic momentum .

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