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

Young Indians are increasingly turning to debt over savings, as rising costs, social media, financial illiteracy and the boom in fintech lending reshape their spending and borrowing habits, according to a new report from CNA’s Insight. Vaishakh Sudhakaran, a 30-year-old resident of Mumbai, found himself drowning in debts after his company shut down, forcing him to take out multiple loans from various platforms to meet his expenses.

Similarly, business owner Purva Matkar, also 28, resorted to loans when she had nothing and could not afford basic necessities. Both women struggled mentally with the pressure of repaying their loans. The trend of borrowing among young Indians has surged, alongside the fintech lending boom, with loan portfolios of fintech-driven non-banking financial companies reaching 2.1 trillion rupees by June last year.

As more young Indians fall into debt, overdue loans have also increased from 7.1% of the fintech portfolio in 2024 to 8.6% last year. Household debt has risen to 47.8% of the GDP, up from 41.3% nine months earlier. Nearly 70% of Indians below the age of 30 have taken at least one loan, up from 53% in 2023, according to a study by Paisabazaar.

The majority of loans taken out by this age group are for non-essential expenses such as travel, which has become a top reason for personal loans in the first half of last year. This youth-driven phenomenon is driven by millennials and Gen Z, who accounted for nine in 10 overseas trips made by Indians last year. While some young adults, like Matkar, view their expenditures as a motivation to work harder and save more, others, like Sharva Mane, rationalize their spending by attending concerts and parties to keep up with their peers.

The contrast between their financial situation and the expectations and aspirations shaped by an improved GDP per capita in India highlights the growing challenge of debt among the country's youth.