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‘I don’t want to miss out’: Why India’s youth are choosing debt over savings
🇸🇬 Singapore /Economy & Trade

‘I don’t want to miss out’: Why India’s youth are choosing debt over savings

From CNA · () English

Summarized and contextualized by DistantNews.

At a glance

In-depth Named sources Context piece
  • Young Indians are increasingly taking on debt, with nearly 70% of those under 30 having at least one loan.
  • This trend is fueled by the rise of fintech lending apps offering quick access to funds.
  • While some loans are for necessities, many young people are also borrowing for discretionary spending like travel, indicating a shift from saving to splurging.

A growing number of young Indians are opting for debt over savings, a trend driven by the accessibility of fintech lending platforms and a desire to maintain a certain lifestyle. Vaishakh Sudhakaran, a 30-year-old Mumbai resident, exemplifies this by taking multiple loans to cover rent and bills after his company shut down. He described losing hope for months, questioning how he would repay the borrowed amounts. Similarly, 28-year-old business owner Purva Matkar turned to loan apps when she "had nothing," finding them the "easiest and quickest" way to access money, despite the mental strain and breakdowns caused by looming payment deadlines.

stuck

— Vaishakh SudhakaranDescribing his situation after losing his job and having no savings.

The surge in borrowing aligns with a boom in fintech lending. By June last year, the loan portfolio of fintech-driven non-banking financial companies reached 2.1 trillion rupees, with active loans increasing by 25.6% year-on-year. However, this expansion comes with risks, as loans overdue by more than 180 days climbed from 7.1% to 8.6% of the fintech portfolio in the past year. Overall household debt also rose, reaching 47.8% of GDP by December, with a notable increase in borrowing for consumption rather than housing.

How do I repay this?

— Vaishakh SudhakaranRecalling his desperation after taking multiple loans.

Saurabh Mukherjea, founder of Marcellus Investment Managers, observes an "explosion in middle-class indebtedness," particularly among the sub-30 age group, where nearly 70% have taken out at least one loan, up from 53% in 2023. This borrowing is not solely for essential needs. A study by Paisabazaar found travel to be the top reason for personal loans in the first half of last year. Millennials and Gen Z accounted for nine in 10 overseas trips by Indians, according to travel fintech platform Niyo. This indicates a generation prioritizing experiences and immediate gratification, even if it means accumulating debt, a stark contrast to traditional saving habits.

I didn’t have any other option but those loans (via lending apps). That was one of the easiest, and the quickest, way for me to get money.

— Purva MatkarExplaining her initial decision to use loan apps.
DistantNews Editorial

Originally published by CNA. Summarized and contextualized by our editorial team with added local perspective. Read our editorial standards.

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