India’s Debt Domino: Middle-class Home Loans Might Be The Final Piece, Warns Saurabh Mukherjea

In today’s India, nan dream of a amended life is much accessible than ever—but besides much dangerous. For nan country’s mediate class, that dream is progressively being financed connected borrowed money. And according to Saurabh Mukherjea, laminitis of Marcellus Investment Managers, nan consequences are already showing.

Using RBI data, Mukherjea says 5 to 10 percent of middle-class households are now stuck successful a indebtedness trap. These aren’t one-off cases—they correspond a increasing shape shaped by societal pressure, easy entree to credit, and pandemic-era behavioral shifts.

“After 2 years astatine location during COVID, group were utterly convinced that immoderate their financial intends are, it doesn’t matter—they excessively tin unrecorded nan bully life,” says Mukherjea successful a podcast pinch nan Federal.

The catalyst? Social media’s relentless showcase of luxury lifestyles. Exotic vacations, latest smartphones, stylish homes—it each creates a high-gloss illusion of normalcy. Add successful nan committedness of bargain now, salary later, and nan mediate people starts borrowing to unrecorded a life they haven’t yet earned.

“You’re told each infinitesimal that you should person nan manner of an IPL cricketer. You don’t person to activity for it—you tin get it connected credit,” Mukherjea points out.

At nan halfway of this displacement is nan India Stack—Jandhan, Aadhaar, Mobile. While it’s a occurrence communicative successful democratizing credit, particularly for mini businesses, it has besides made borrowing dangerously effortless.

“It allows group to return connected a ton of indebtedness almost unthinkingly,” Mukherjea notes.

The signs of problem are unfolding successful a predictable pattern. First came defaults among microfinance borrowers. Then, unsecured individual loans began turning sour. Now, in installments paper NPAs are rising, and issues are surfacing successful two-wheeler financing.

“Whenever I spot in installments cards being handed retired astatine airports, nan expert successful maine starts worrying,” he says.

So far, location and car loans haven’t cracked—but Mukherjea warns that they’re adjacent if nan rhythm continues.

Meanwhile, family savings are drying up. RBI information shows nett financial savings are astatine a 50-year low. The mediate people is either servicing EMIs aliases pouring money into banal markets, leaving banks pinch less deposits and households pinch nary buffer.

What’s nan measurement out?

Mukherjea recommends a bold argumentation response: a 2% complaint trim by nan RBI, liquidity injection, and a 10–15% rupee devaluation to easiness nan indebtedness load and reignite demand.

“If nan RBI could enactment decisively, galore of these problems could beryllium solved quickly and successful unison.”

Until then, India’s mediate people remains caught successful a rhythm of aspiration-fueled borrowing—with nary easy exit successful sight.

Published on: Apr 24, 2025 11:16 AM IST