A lifestyle they can’t afford? Private banker questions why India’s middle class won’t cut back

India's middle class isn’t just spending more, it’s spending to keep up. Roshaan Mahbubani, a Mumbai-based private banker, has flagged the contradiction in a LinkedIn post.  

“With social media showcasing the lives of the rich and famous, many middle-class families feel pressured to project a similar lifestyle,” Mahbubani writes. 

From international travel to luxury gadgets, the optics of success are often prioritised over financial reality.

“Personal loans, credit cards, & easy EMIs have enabled middle-class consumers to purchase luxury items that were once considered unattainable.” But this surge in credit access has also led to ballooning liabilities for many households.

“This ‘aspirational trap’ results in prioritizing lifestyle expenses over savings and investments,” Mahbubani explains. As peer lifestyles evolve, so does the pressure to keep pace—regardless of income levels.

“Lifestyle creep, where discretionary spending increases with rising income, pushes families to maintain a standard of living that may not align with their financial reality.” Even as inflation bites, spending on non-essentials often continues unchecked.

Many also justify indulgence as emotional relief. “These expenditures are seen as a reward for hard work, despite the financial strain they might cause.”

Saurabh Mukherjea, founder of Marcellus Investment Managers, recently offered a stark assessment in a podcast. “The middle class has borrowed hand over fist.” RBI data shows credit card and retail loans have jumped from 4% to 11% of total banking credit over the past decade.

He warns that 5–10% of middle-class Indians are in a debt spiral, with many unlikely to repay. The RBI’s Financial Stability Review reveals:

• 45% of borrowers are subprime.
• 48% of their debt is for consumption, not investment.
• 67% have personal loans.
• 25% hold a credit card, a personal loan, and at least one high-ticket loan.

“This isn’t just borrowing for investment—this is borrowing to survive,” Mukherjea said.