**Executive Summary:**
This document presents the Ministry of Finance's response to questions raised in Lok Sabha regarding the increase in citizen debt, external debt, and related economic concerns. It clarifies that the average debt of an Indian citizen has not increased by Rs. 90,000 over the last two years. The document outlines the government's perspective on household debt, external debt, and measures taken to foster income growth, manage foreign borrowings, and reduce household debt burden. The reference date for external debt data is March 2025.
**Key Points / Main Content:**
* **Citizen Debt:**
* RBI data indicates an increase in per capita debt from ₹3.9 lakh in March 2023 to ₹4.8 lakh in March 2025 for a specific set of borrowers.
* This data does not represent the average debt of all Indian citizens.
* The increase in household debt is primarily due to a growing number of borrowers.
* Household financial assets have increased from 103.5% of GDP in March 2023 to 106.2% in March 2024.
* Aggregate household financial liabilities increased by ₹1925 from 2022-23 to 2023-24.
* **External Debt:**
* India's external debt stood at US$736.3 billion as of March 2025, a 10.1% increase from March 2024.
* **Government Initiatives:**
* Focus on ease of doing business, skilling, employment generation, and infrastructure creation to foster income growth.
* Easing of interest rates and liquidity to bolster growth and reduce household debt service burden.
* Income tax exemption for annual incomes up to ₹12.75 lakh to increase disposable income.
* **Regulatory Measures:**
* RBI increased risk weights on certain segments of consumer credit and bank lending to NBFCs in November 2023.
* Loan growth in unsecured retail loans has decreased from 27.0% (September 2021-23) to 11.6% (September 2023-March 2025).
* **Foreign Borrowings Management:**
* India's external debt-to-GDP ratio is 19.1% as of March 2025.
* The government aims to reduce the fiscal deficit to 4.4% of GDP in 2025-26 and bring total government debt down to about 50% of GDP by 2031.
**Impact Analysis:**
**Indian Citizens:**
* *Impact:* The document clarifies the situation regarding average citizen debt, highlighting that the increase in debt is not uniform across the population and that household financial assets have also increased. Increased disposable income from tax exemptions.
* *Action Required:* No specific action required. Citizens should be aware of the government's efforts to promote economic growth and manage debt.
**Borrowers (Individuals and Businesses):**
* *Impact:* Highlights trends in per capita debt and the influence of credit scores on borrowing patterns.
* *Action Required:* Understand the impact of credit scores on loan availability and interest rates.
**Reserve Bank of India (RBI):**
* *Impact:* The RBI's data is used to assess citizen and external debt levels. Its regulatory actions are acknowledged in managing loan growth.
* *Action Required:* Continue monitoring debt levels and implementing appropriate regulatory measures.
**Non-Banking Financial Companies (NBFCs):**
* *Impact:* Affected by RBI's increase in risk weights on bank lending to NBFCs.
* *Action Required:* Adjust lending practices to comply with RBI regulations.
**Government of India:**
* *Impact:* Accountable for managing external debt and promoting economic growth.
* *Action Required:* Continue implementing policies to foster income growth, manage foreign borrowings, and reduce the fiscal deficit.
Key Entities Referenced
Ministry of Finance: The government ministry responsible for the economy of India.
Lok Sabha: The lower house of the Parliament of India.
Shri Chamala Kiran Kumar Reddy: The Member of Parliament who raised the unstarred question.
Reserve Bank of India: The central bank of India.
Transunion CIBIL: A credit information company.
Non-Banking Financial Companies: Financial institutions that provide banking services without meeting the legal definition of a bank.
Financial Stability Report, June 2025: RBI report that includes data on consumer debt.
GDP: Gross Domestic Product, a monetary measure of the market value of all the final goods and services produced in a specific time period.
`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 self-
reliance;
(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, vis-
a-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.
***