Equated Monthly Instalments (EMIs) have emerged as a greater financial burden for India’s middle class than inflation or rising taxes, according to financial expert Tapas Chakraborty.
In a LinkedIn post, Chakraborty warned that EMIs are silently draining incomes and leaving families without any savings buffer.
Chakraborty stated that while inflation is often seen as the primary concern for middle-income households, it is the expanding EMI culture that poses a more serious threat. “The biggest trap for India’s middle class? Not inflation. Not taxes. It’s EMIs,” he wrote.
He described a cycle of financial behaviour that has become increasingly common: “Earn, Borrow, Repay, Repeat. No savings. Swipe again.” He argued that this loop leaves families vulnerable to any emergency or income disruption.
What started as a tool for convenience—monthly instalments on appliances, electronics, holidays and even groceries—has become a normalised way of living. Chakraborty pointed out that almost everything is now available on EMI, reducing the need to save before making purchases.
He noted that around 70% of iPhones in India are bought on EMI, reflecting how deeply the model has penetrated daily spending patterns.
Household debt in India has climbed to 42% of the country’s GDP. Out of this, over 32% comes from unsecured sources such as personal loans, credit cards, and ‘Buy Now, Pay Later’ schemes.
Chakraborty said 11% of small borrowers have already defaulted, while many are juggling multiple loans at once. “A phone EMI of ₹2,400, a bike at ₹4,000, and credit card dues of ₹6,500 can easily add up to ₹25,000 a month,” he said.
Chakraborty warned that families with no savings or financial cushion are especially vulnerable. “No savings. No cushion. One health emergency—and things break,” he said, highlighting the lack of emergency preparedness among EMI-dependent households.
He also noted that the pressure of continuous repayments is causing stress, which can reduce work focus and productivity.
The shift towards easy credit and rising personal debt may also be affecting the wider economy. Chakraborty explained that lower savings rates result in lower investments, and high household debt can lead to rising defaults, slowing economic momentum.
“Middle class squeezed, country slows,” he said, summarising the potential national-level impact of this financial behaviour.
To break out of this cycle, Chakraborty recommended that individuals should ensure their total EMI outgo does not exceed 40% of their income. He also advised building a safety fund—starting with as little as ₹500 a month—and avoiding debt-driven consumption.
“Living with stress isn’t normal. Owning things, you haven’t paid off isn’t success,” he concluded, adding that financial freedom comes from owing less, not earning more.
