New Delhi, February 27: The Congress has raised concerns over rising household indebtedness in India, attributing the issue to stagnation in real wages and accusing the government of failing to recognize the crisis.
Citing the Indus Valley Annual Report 2025, a comprehensive analysis of India's economic and start-up landscape by venture capital firm Blume Ventures, Congress General Secretary in Communications Jairam Ramesh highlighted alarming trends in household finances.
According to the report, India’s economic recovery post-COVID-19 has been driven by consumption fueled by loans rather than organic income growth. Ramesh pointed out that in the post-pandemic years, consumer loans accounted for 18% of the Private Final Consumption Expenditure, with personal loans surpassing industry loans as the largest segment of non-food borrowing.
The Congress leader said that a significant contributor to this trend has been the rise in small-ticket personal loans from non-banking financial companies (NBFCs), which accounted for 82% of new personal loans in 2024. However, he warned that instead of boosting consumption, credit expansion has led to a household debt crisis.
Ramesh claimed that household debt to GDP has reached a record high of nearly 43%, while household savings have sharply declined. He pointed out that the household share of savings fell from 84% in FY 2000 to 61% in FY 2023, correlating this trend with a rise in uninvested corporate profits.
The Congress leader further argued that the lack of savings to support investments, coupled with sluggish foreign direct investment (FDI), has resulted in a significant slowdown in private investment in the country.
Blaming stagnant real wages across both salaried and informal rural sectors as the root cause of the crisis, Ramesh emphasized that without increasing labor productivity and wages, consumption growth will be unsustainable and reliant on excessive borrowing.
Despite this issue persisting for over a decade and worsening post-COVID-19, he alleged that the government continues to ignore the crisis.
Last updated by a enewsx: