India's Economic Stability Under Scrutiny

India's economy has shown positive growth prospects for 2024, driven by strong fundamentals and healthy financial institutions. However, a deeper examination reveals critical risks that could threaten this optimism, particularly highlighted in the Reserve Bank of India's latest financial stability report. One significant concern is the rising household debt, currently at 42.9% of GDP, which has been increasing due to a higher number of borrowers rather than larger loans. The distinction in spending patterns between subprime borrowers, who predominantly use loans for consumption, and wealthier borrowers, who invest in assets, raises questions about the overall financial stability and sustainability of household spending.