India's Household Debt Boom: A Subprime Crisis in the Making?

India's economic growth narrative has long been underpinned by robust domestic consumption. However, recent trends indicate a shift towards increased reliance on debt to fuel this consumption, raising concerns about financial stability. The surge in unsecured personal loans, primarily for consumption rather than asset creation, mirrors patterns observed in the U.S. subprime mortgage crisis. This blog delves into the data and trends that suggest India could be on the brink of a similar financial upheaval. Data Contrary:- Economic Survey Of India The Surge in Household Debt As of June 2024, India's household debt stood at 42.9% of GDP , a significant rise from 36.6% in June 2021 . This increase is primarily driven by a surge in unsecured personal loans, which grew by 20.6% year-on-year in the first half of FY25 . Notably, unsecured loans now constitute 19.7% of GDP, reflecting a growing reliance on short-term credit for consumption. Consumption Over Asset Creation A concerning ...