'Middle class is borrowing just to survive present': CA flags a rising debt trap

India’s middle class is in silent crisis, warns Delhi-based chartered accountant Ayussh Sanghi. “We’re not saving for the future anymore—we’re borrowing just to survive the present.”

What was once a badge of financial discipline has now morphed into a cycle of swipe-now, worry-later. EMI iPhones, BNPL dinners, PayLater wardrobes—this isn’t aspirational spending, Sanghi argues in a LinkedIn post. It’s desperation disguised as lifestyle.

“Instagram, influencer culture, instant delivery apps, they’re selling dreams we can’t afford,” he says. “‘Middle-class lifestyle’ now means credit-fueled consumption. The culture of savings is dead now.”

He adds, “We are not just buying more; we're buying more to be seen.”

The numbers tell the story. Credit card defaults in India surged 28.42% in 2024 alone, according to an Indian Express report the CA quoted in his post. 

Non-performing assets (NPAs) in the segment touched ₹6,742 crore—₹1,500 crore more than the previous year.

Over five years, credit card NPAs have jumped more than 500%:

• 2020: ₹1,108 crore
• 2021: ₹3,182 crore
• 2022: ₹3,887 crore
• 2023: ₹5,250 crore
• 2024: ₹6,742 crore

Outstanding credit card loans have also more than doubled—from ₹1.4 lakh crore in 2020 to ₹2.92 lakh crore by 2024.

“This isn’t about bad borrowers,” Sanghi notes. “It’s about a system that rewards short-term consumption and punishes long-term discipline.”

The spike in defaults coincides with a sharp rise in credit card usage. Annual transactions tripled in just three years—from ₹6.3 lakh crore in FY21 to ₹18.31 lakh crore in FY24. The number of active credit cards has jumped from 6.1 crore in 2021 to 10.88 crore as of January 2025.

Most of this credit is unsecured, and late payments attract punishing interest rates—between 42% and 46% annually. 

In November 2023, the Reserve Bank of India increased the risk weight on unsecured retail loans by 25%, citing the rapid rise in household debt. While banks have reduced overall NPAs across sectors, personal loans and credit cards remain an outlier.