Bhubaneswar: There was a time in India when carrying debts was a matter of shade. People considered debt as a hush-hush affaire. One only borrowed when it was urgently needed, to build a house, to educate children or more prominently medical cases. But in today’s time being in debt is normal. It has become a lifestyle choice. Borrowing money has come down to some fancy choices like doing any beauty treatment, eating in restaurants, going in holidays, buying furniture or home accessories, iPhones etc. Anything and everything is available on EMIs which is Equated Monthly Installments. One gets what is wanted now and leave the worry of payments for next month. These are not about the generic loans such as car loans, home loans, credit cards or the loans that are needed for business investments. These are the lifestyle loans, that have normalized indulgences which you cannot afford at one go.
Today, everything comes with an EMI plan, with the provision of ‘buy now and pay later’ (BNPL). Indian’s Fintech boon has powered this system by connecting everything to your phones. The Ids, bank accounts on the tap of your fingers. Earlier getting a loan was a very lengthy process. Everyone was not able to avail it easily. Now the process is much easier, Loans are at ones finger tips. This is not just democratized credit but also normalized debt. According to the data, in the first quarter of 2025, the household debt rose to 42% of the GDP, which is the highest ever number. Even during the pandemic it was of 35%. Out of 42% of debt, 35% is unsecured debts for example from credit cards, BNPL schemes, short term personal loans. This unsecured loans are growing fast. The defaults are coming faster. As of 2025, 11% of small burrowers have already defaulted.
Indians are burrowing so much due to necessary purchases, family emergencies, even everyday costs of living. When the wants and needs are being confused with necessary debt policies, the problem begins to arise. For example an iPhone, which is an aspirational symbol. According to an estimate, 70% of iPhones are sold in India on EMI. Another such is beauty treatment, which again is a luxury. Yet people prefer to borrow money for it. Companies like Fibe hand out Rs 20 crore every month on wellness loans. Needless to say, earlier we used to budget around needs and now it happens on repayments. The cycle goes like buy things in debt, spend all your money in repayments then you borrow again.
Once upon a time the average Indian household saved nearly 30% of their income, it has now come down to below 20%. In some cases it is dangerously goes down to zero. One does not need to be rich to feel free, but you just have owe less money. Because debt does not knock on the door loudly but creeps in quietly until one day you realize you have not worked for your future security but to only pay or repay for the past expenses. There are a few potential ways to manage your finances smartly,They are:
- track your EMIs, you should be aware how much you owe
- cap your EMI burdens, it should not be more than 40% of your income.
- start a rainy day fund, be it a thousand rupees in a month can give a cushion.
- Invest slow and steady, in form of SIP, PPF, the National Pension Scheme etc
- avoid the lifestyle loans
-OdishaAge
