India's household savings have dropped to their lowest level in six years in FY23, with net financial savings as a percentage of GDP falling to 5.3%, well below the historical average of 7.6%. This decline is occurring despite a surge in consumption after the pandemic, which is primarily driven by easy credit rather than increases in wages or savings.

Analysts are warning that consumer spending momentum is slowing down, as household balance sheets are under pressure. The growth in gross financial savings has not kept up with a significant 30% annual increase in household liabilities from FY21 to FY23, as highlighted in a report by Crisil. Experts predict that weak consumption growth may persist for several quarters due to strained household finances, a cyclical economic downturn, and the impact of job automation.

The reliance on debt is expected to continue until there are signs of recovery in the white-collar job market.