Lok Sabha Question No. 104 (UNSTARRED), answered on 2025-07-21
Subject: Increase in Debt of Citizen
Ministry: FINANCE
Asked by: Shri Chamala Kiran Kumar Reddy

## `GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF ECONOMIC AFFAIRS

## LOK SABHA

## UNSTARRED QUESTION No. 104

TO BE ANSWERED ON 21 JULY 2025/ ASHADHA 30, 1947 (SAKA)

## INCREASE IN DEBT OF CITIZEN

## 104. Shri Chamala Kiran Kumar Reddy

Will the Minister of FINANCE be pleased to state:

- (a) whether it is a fact that the average debt of an Indian citizen has been increased by Rs. 90,000 over the last two years, if so, the details thereof;
- (b) whether it is also true that the external debt of the country has been reached to 736.3 billion dollars which is more than 10% higher than the last years debt;
- (c) whether  the  Government  acknowledges  concerns  that  the  current  model  of  economic  loans  may  push families  into  a  cycle  of  survival-based  borrowing  rather  than  enabling  sustainable  development  and  selfreliance;
- (d) if so, the details thereof; and
- (e) the concrete steps taken/proposed to be taken by the Government to reverse these alarming trends in citizen debt, low income growth and rising foreign borrowings?

## ANSWER MINISTER OF STATE IN THE MINISTRY OF FINANCE

## (SHRI PANKAJ CHAUDHARY)

(a), (c) and (d): No, Sir.  As informed by the Reserve Bank of India (RBI), at the end of March 2025, there were around 28 crore unique individual borrowers reported by Transunion CIBIL, a credit information company, visa-vis  India's  population  of  more  than  140  crores.  For  this  unique  set  of  borrowers,  RBI  has  reported  in  its Financial Stability Report, June 2025 an increase in per capita debt (proxied by consumer segment loans utilised for either personal or business purposes) from ₹ 3.9 lakh in March 2023 to ₹ 4.8 lakh in March 2025.   Thus, this data  does  not  represent  the  average  debt  of  an  Indian  citizen.  The  disaggregated  data  on  household  debt, published by RBI, shows that the increase in household debt is driven by a growing number of borrowers rather than an increase in average indebtedness. Further, close to two-thirds of the loans are attributed to borrowers with  high  credit  scores.  The  per  capita  debt  of  highly  rated  borrowers,  which  is  generally  utilised  for  asset creation, has increased sharply. Moreover, the stock of financial assets of the households as a percentage of GDP increased from 103.5 per cent in March 2023 to 106.2 per cent in March 2024. This signals an improvement in the net financial position of the households.

Further,  based  on  the  latest  available  information  from  National  Account  Statistics,  the  aggregate  financial liabilities  of  households  (inclusive  of  loans  from  cooperative  banks,  insurance  corporations,  non-banking financial companies and Government), divided by the population of India, increased from ₹ 11545 in 2022-23 to ₹ 13470 in 2023-24, implying an increase of just ₹ 1925 during this period.

(b): As per the latest data available from the RBI, India's external debt stood at US$736.3 billion as on March 2025, an increase of 10.1 per cent from March 2024.

(e):  The  government's  focus  on  ease  of  doing  business,  skilling,  employment  generation,  and  creating infrastructure is fostering income growth. Additionally, ongoing easing of interest rates and liquidity is expected to  bolster  growth  and  reduce  households'  debt  service  burden.  The  new  income  tax  exemption  for  annual incomes up to ₹ 12 -12.75 lakh is expected to increase disposable income for the middle class, which can help households  manage  debt  and  spur  consumption.  From  a  regulatory  perspective,  the  RBI  in  November  2023 increased the risk weights on certain segments of consumer credit and bank lending to Non-Banking Financial Companies (NBFCs), citing the high growth seen in those segments. Consequently, the loan growth (CAGR) in unsecured  retail  loans  segment  has  fallen  from  27.0  per  cent  between  September  2021-23  to  11.6  per  cent between September 2023 - March 2025.

With regard to foreign borrowings, India is managing its external debt with notable prudence, as reflected by a low  external  debt-to-GDP  ratio  of  19.1  per  cent  as  of  March  2025.  The  government  has  set  a  clear  path  to restrain growth in public borrowings by proposing to reduce the fiscal deficit to 4.4% of GDP in 2025-26 and intends  to  bring  total  government  debt  down  to  about  50%  of  GDP  by  2031,  thereby  not  increasing  the benchmark rates or debt service pressures for the domestic economy and citizens.

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