'We just save Rs 5 out of Rs 100': Indians hit by savings crisis, expert on why 95% can’t save money
India is in the midst of a deepening household savings crisis, with families saving only Rs 5 out of every Rs 100 they earn. Experts warn that this 47-year low—paired with soaring debt—reflects a dramatic change in financial habits. The shift from asset-building to consumption-led borrowing is now putting millions at long-term risk.
- Nov 25, 2025,
- Updated Nov 25, 2025 5:22 PM IST
India is facing a silent but severe household savings crisis, one that experts say is the worst in nearly five decades. Ankur Warikoo, angel investor and one of India’s most influential financial educators, recently highlighted a startling data point: India’s household savings rate has plunged to just 5.1%. In simple terms, if a family earns Rs 100, it saves barely Rs 5 — the lowest level in 47 years. In contrast, previous generations in the 1970s, 80s and 90s saved far more as a share of their income. What has risen instead is debt.
Warikoo said India’s total household debt has ballooned to Rs 120 lakh crore, a figure unimaginable a decade ago. But what’s more worrying is where this debt is going. Earlier, families borrowed mainly to buy long-term assets like homes or gold. Today, loans are used for cars, phones, clothing, groceries—even vacations. Consumption is rising faster than income, and the gap is being filled by credit.
A major red flag is the explosion in credit card stress. Outstanding credit card dues now stand at Rs 3 lakh crore, and 28% of users are defaulting—meaning nearly one in three people cannot pay even one month’s bill. With the average credit card balance at Rs 33,000 and the national average salary around Rs 25,000, the math simply doesn’t add up. Personal loan defaults tell a similar story: between 2023 and 2025, loans under Rs 1 lakh saw a staggering 44% default rate.
Financial Stress vs mental stress
Warikoo added that financial stress is spilling into mental health, with some reports suggesting nearly 19% of suicides in India are linked to money troubles.
At the same time, traditional financial advice has stopped working. For decades, the Indian playbook was simple: earn, save in FDs, buy gold, buy a house. But in 2026, this formula is broken. Fixed deposits yield 6–7%, but after tax, returns barely touch 6%. Real inflation—visible in grocery bills, e-commerce prices and daily essentials—is closer to 8–10%. This means savings are losing value every year.
Warikoo noted that housing, which was once the cornerstone of Indian wealth creation, has become almost unattainable. Property prices in many cities have jumped to Rs 4–5 crore, while salaries have grown at only 6.3% annually in the past decade. The gap is too wide to bridge, pushing homeownership out of reach for most.
Even when the government made income up to Rs 12 lakh tax-free in 2025—a massive relief for 80% of taxpayers—most people spent the savings instead of investing them.
So what’s the way out?
Experts point to three survival strategies: upskilling to grow income faster than inflation, taking calculated investment risks through equity markets, and building side gigs that tap global opportunities. In a rapidly changing economic landscape, Indians will need new skills, new habits and new income streams to reclaim control of their financial future.
Looking ahead, economists warn that unless households rethink spending patterns, prioritise savings, and embrace disciplined investing, India may experience a long-term financial vulnerability at the family level. The country’s young workforce has the opportunity to reverse this trend—but only if they act early. Developing financial literacy, automating investments and resisting lifestyle inflation will be crucial in ensuring that the next generation does not inherit a deeper savings crisis.
India is facing a silent but severe household savings crisis, one that experts say is the worst in nearly five decades. Ankur Warikoo, angel investor and one of India’s most influential financial educators, recently highlighted a startling data point: India’s household savings rate has plunged to just 5.1%. In simple terms, if a family earns Rs 100, it saves barely Rs 5 — the lowest level in 47 years. In contrast, previous generations in the 1970s, 80s and 90s saved far more as a share of their income. What has risen instead is debt.
Warikoo said India’s total household debt has ballooned to Rs 120 lakh crore, a figure unimaginable a decade ago. But what’s more worrying is where this debt is going. Earlier, families borrowed mainly to buy long-term assets like homes or gold. Today, loans are used for cars, phones, clothing, groceries—even vacations. Consumption is rising faster than income, and the gap is being filled by credit.
A major red flag is the explosion in credit card stress. Outstanding credit card dues now stand at Rs 3 lakh crore, and 28% of users are defaulting—meaning nearly one in three people cannot pay even one month’s bill. With the average credit card balance at Rs 33,000 and the national average salary around Rs 25,000, the math simply doesn’t add up. Personal loan defaults tell a similar story: between 2023 and 2025, loans under Rs 1 lakh saw a staggering 44% default rate.
Financial Stress vs mental stress
Warikoo added that financial stress is spilling into mental health, with some reports suggesting nearly 19% of suicides in India are linked to money troubles.
At the same time, traditional financial advice has stopped working. For decades, the Indian playbook was simple: earn, save in FDs, buy gold, buy a house. But in 2026, this formula is broken. Fixed deposits yield 6–7%, but after tax, returns barely touch 6%. Real inflation—visible in grocery bills, e-commerce prices and daily essentials—is closer to 8–10%. This means savings are losing value every year.
Warikoo noted that housing, which was once the cornerstone of Indian wealth creation, has become almost unattainable. Property prices in many cities have jumped to Rs 4–5 crore, while salaries have grown at only 6.3% annually in the past decade. The gap is too wide to bridge, pushing homeownership out of reach for most.
Even when the government made income up to Rs 12 lakh tax-free in 2025—a massive relief for 80% of taxpayers—most people spent the savings instead of investing them.
So what’s the way out?
Experts point to three survival strategies: upskilling to grow income faster than inflation, taking calculated investment risks through equity markets, and building side gigs that tap global opportunities. In a rapidly changing economic landscape, Indians will need new skills, new habits and new income streams to reclaim control of their financial future.
Looking ahead, economists warn that unless households rethink spending patterns, prioritise savings, and embrace disciplined investing, India may experience a long-term financial vulnerability at the family level. The country’s young workforce has the opportunity to reverse this trend—but only if they act early. Developing financial literacy, automating investments and resisting lifestyle inflation will be crucial in ensuring that the next generation does not inherit a deeper savings crisis.