Less Earnings, More EMIs: Is the Middle Class Getting Trapped in a Debt Trap? Survey figures are raising concerns

By Sandy Verma On Jul 29, 2026

Middle class debt trap India: Dream of owning a home, children’s education, medical emergencies and rising day-to-day expenses—among all these, the country’s middle class is fast becoming dependent on debt. Easy loans, credit cards and digital financing have provided relief in times of need, but for many families this debt is now a major concern. A recent survey indicates that a large number of borrowers are grappling with the burden of rising EMIs and the vicious cycle of debt.

About 60 percent of borrowers surveyed by debt resolution platform ‘Expert Panel’ have monthly EMIs equal to or higher than their family income. This situation shows that the balance between income and debt is rapidly deteriorating. The survey also revealed that nearly 40 percent of people have been forced to take new loans or resort to credit cards to pay installments of old debts. Financial experts consider this situation to be a sign of a ‘debt trap’ i.e. a vicious cycle of debt.

Due to which debt is increasing?

The survey data shows that people are not only taking loans for lifestyle expenses, but economic compulsions are also a major reason in many cases:

26% of people: Had to take loan due to medical emergency.
22% of people: Debt incurred for children’s education or marriage expenses.
18% of people: Borrowing due to job loss or business downturn.
15% of people: Took the help of loans to meet daily household expenses.

These figures show that rising debt is not only a sign of consumer spending, but also of economic stress and uncertainty.

Why is it becoming difficult to pay off debt?

Those surveyed gave startling details about the difficulties they face in paying off debt:

33% of people Loss of job or loss of income was shown as the main reason.
28% of people Said that the EMI burden has increased a lot compared to the income.
19% of people Being under pressure due to multiple loans.
In 12% of cases Caused by a medical or family emergency.

The most worrying thing is that almost 60 percent of the debtors are making only the minimum payment (Minimum Due) or are defaulting in paying the installments. While about 20 percent people have already received legal notices.

Why worry about rising debt?

Reserve Bank of India (RBI) data shows that indebtedness of the domestic sector has increased over the past few years, while the household savings rate has declined. This is why economists and financial advisors are constantly advising disciplined borrowing and maintaining financial discipline.

Experts say that taking a loan is not a wrong thing in itself; A loan taken for home, education or business can be a means of financial progress. But when the EMI burden begins to overwhelm the income and new debt is required to repay the old debt, the situation becomes a serious financial risk. Therefore, proper assessment of income, savings and future needs is very important before taking any loan.

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