India’s household debt has declined year-on-year for the first time in five years, even as the broader trend over the past half-decade showed a sharp rise in borrowing accompanied by weakening savings, fresh data presented in the Rajya Sabha shows.
According to the Finance Ministry, household financial liabilities fell to ₹15.7 lakh crore in FY25 (provisional) from ₹18.8 lakh crore in FY24, marking a 16% year-on-year decline. This comes after liabilities had risen steadily from ₹7.7 lakh crore in FY20 to a peak of ₹18.8 lakh crore in FY24, driven largely by rapid expansion in retail credit.
According to government data, there has been a clear shift in the structure of household borrowing. Year-on-year, housing loans grew 13%, rising from ₹34.7 lakh crore in FY24 to ₹39.2 lakh crore in FY25, while non-housing retail loans expanded at a much faster 21.7%, increasing from ₹60.9 lakh crore to ₹74.1 lakh crore.
Over the past five years, non-housing retail loans have jumped from ₹28.1 lakh crore to ₹74.1 lakh crore, outpacing the rise in home loans and signalling growing reliance on personal loans, credit cards, consumer durable financing and vehicle loans, segments that tend to expand more rapidly but also carry higher credit risk.
Meanwhile, financial assets rose marginally to ₹35.6 lakh crore in FY25 from ₹34.3 lakh crore a year ago. Over five years, assets have increased by around 50%, but liabilities have more than doubled, signalling a stretched household balance sheet despite the latest moderation.
Household savings as a share of GDP fell for the third straight year to 18.1% in 2023-24, down from 18.6% in 2022-23 and sharply below the pandemic-era peak of 22.7%. The decline reinforces the growing dependence on borrowing to fund consumption, as disposable incomes fail to keep pace with spending needs.
In March this year, Finance Minister Nirmala Sitharaman dismissed concerns over household debt, asserting that India’s household debt is comparatively lower than many emerging economies and some developed nations.
Despite the annual decline, the five-year view shows households have taken on significantly more debt than before the pandemic. Liabilities have risen by over ₹8 lakh crore since 2019-20, highlighting the scale of the leverage build-up.
(Edited by : Shoma Bhattacharjee)
First Published: Dec 2, 2025 5:59 PM IST
