India’s middle class is 'borrowing to survive': Marcellus' Saurabh Mukherjea sounds the alarm

India’s middle class is sinking into a massive debt trap, and the numbers are getting worse. In a recent podcast, Founder and Chief Investment Officer at Marcellus Investment Managers Saurabh Mukherjea flagged a troubling reality — millions of middle-class Indians have taken on multiple loans they may never be able to repay. 

The signs are everywhere: soaring personal loans, rising credit card debt, and a growing number of borrowers struggling just to meet daily expenses.

"The middle class has borrowed hand over fist," Mukherjea said, citing RBI data. "Over the last decade, credit card and retail loans have jumped from 4% to 11% of total banking system credit outstanding. This isn’t just borrowing for investment—this is borrowing to survive."

Mukherjea pointed to the RBI’s Financial Stability Review (FSR), which paints a dire picture of middle-class debt in India:

• 45% of India’s borrowers are subprime, meaning they have poor creditworthiness and are at a high risk of default.
• 48% of the debt taken on by these subprime borrowers is for consumption, not asset-building.

"This means nearly half of what these financially vulnerable borrowers owe is just to sustain their daily lives," Mukherjea explained. "It’s not for investments, not for wealth creation—just for survival."

5-10% of middle-class India is in a debt trap

Mukherjea’s analysis suggests that between 5-10% of middle-class Indians have entered a debt spiral, where they have taken on multiple loans they will likely never be able to fully repay. He breaks it down using data from RBI and credit bureau reports:

• 67% of middle-class Indians have taken personal loans.
• 25% of all borrowers hold a credit card, a personal loan, and at least one other high-ticket loan.
• 45% of total borrowers are subprime, and half of their borrowing is just for day-to-day needs.

"When you put these figures together, it’s clear that 5-10% of middle-class India is trapped in debt," Mukherjea warned. "These are people with modest incomes who have accumulated loans they simply cannot pay back."

Mukherjea cautioned that this issue is not going away anytime soon. "Each passing year, this problem will get bigger, unless it’s actively addressed," he said. "If you are a middle-class Indian struggling with debt, seek financial counseling before it spirals further."