Debt Isn't the Enemy: It Provides a Lifeline to Many Indian Families

The size and weight of debt burdens differ vastly by the occupations of debtors and these details offer cues for policy responses

- RAJESH SHUKLA is managing director and chief executive officer of People Research on India's Consumer Economy.

As India marches towards its $5 trillion economic goal, the discourse around household debt tends to veer towards alarm. Rising indebtedness is often viewed as a red flag—a symptom of financial stress or economic exclusion. While this concern is not unfounded, it also misses a crucial dimension. For many Indian households, debt is not just a burden. It is a deliberate tool for investment, a coping mechanism in the face of weak public provisioning and sometimes a pathway to upward mobility.

New insights from PRICE's ICE 360° research reveal that around 30% of India's 331 million households currently carry debt. But this topline figure hides wide variation across occupational groups; and the nature of borrowing, its purpose and its source offer a more nuanced view of household finance in India.

Self-employed agricultural households, for instance, have the highest incidence of debt (38%), followed closely by non-agricultural laborers and other self-employed households (both at 28-29%). This suggests not just vulnerability, but active economic engagement. In agriculture, 57% of self-employed borrowers report using loans for productive needs like farming inputs and livestock. In non-agriculture, 31% of the self-employed borrow to expand their businesses. These are investments in livelihoods, not signs of distress.