India is undergoing a significant structural shift as household consumption increasingly relies on credit cards and Equated Monthly Installments (EMI) rather than traditional savings. Recent data reveals that nearly one-third of all domestic digital payment transactions are now credit-driven, signaling a departure from the conventional 'save-then-spend' model. According to the Reserve Bank of India (RBI), net household financial savings plummeted to approximately 5.1% of GDP in fiscal year 2024. Concurrently, household debt surged to nearly 41% of GDP by early 2025, highlighting growing leverage among consumers. While this trend boosts short-term retail volumes and benefits major financial institutions, the sharp decline in financial buffers poses long-term macroeconomic risks. Analysts remain cautious, noting that high debt-to-GDP ratios could lead to potential financial instability if economic growth slows.
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