The EMI Epidemic: 83% of Kashmiris Now Live Paycheck-to-Paycheck
By: Javid Amin
Srinagar 21 April 2025: Kashmir’s economy, already fragile due to decades of conflict, is buckling under the weight of personal debt. According to the J&K Economic Survey 2025, household debt has surged by 217% since 2020, with 83% of families spending over half their income on EMIs. The average Kashmiri household now owes ₹7.2 lakh across 7–8 active loans—from cars and iPhones to home renovations and weddings.
Deep Dive Data:
- District Breakdown: Srinagar leads with ₹9.1 lakh/household debt, followed by Anantnag (₹6.8 lakh) and Baramulla (₹5.9 lakh).
- Income-Debt Gap: Median monthly income is ₹18,000, but EMI outflows average ₹23,500—forcing families to borrow more to repay existing loans.
- Informal Loans: 34% borrow from unregulated lenders charging 30–45% interest, deepening the crisis.
Home Loans Surge:
- ₹4,300 crore: Home loans disbursed in Kashmir in 2024 (up 89% since 2020).
- 65% of home loans are for “upgrades” (larger homes, marble flooring) rather than first-time purchases.
- Default Rate: 22% of borrowers have missed 3+ EMI payments (J&K Bank).
Impact: Families like the Dar’s in Pulwama took a ₹35 lakh home loan for a “modern” house but now face eviction after defaulting for 8 months. “We sleep under a chandelier but eat once a day,” says Rafiq Dar.
iPhones Over Investments: How Luxury Loans Are Crippling Futures
Kashmir’s obsession with luxury has shifted from cultural pride to financial suicide. Apple iPhones account for 43% of EMI-driven gadget purchases, despite 72% of users earning under ₹25,000/month.
Luxury Loans vs. Productive Investments (2025):
| Category | EMI Spending (₹ Cr) | Investment (₹ Cr) |
|---|---|---|
| Smartphones | 1,200 | 0 (no ROI) |
| Luxury Cars (SUVs) | 980 | 0 (depreciating) |
| Home Renovations | 650 | 0 (non-income) |
| Mutual Funds/Stocks | 90 | 310 |
| Small Businesses | 75 | 420 |
Case Study: A Srinagar IT professional, Aarif (32), pays ₹18,000/month EMIs for his iPhone 15, Hyundai Creta, and “smart home” upgrades. His savings? ₹1,200/month. “I’ll work until I die,” he admits.
Debt vs. Dowry: The Cultural Pressures Fueling Kashmir’s Borrowing Boom
Kashmir’s debt crisis is rooted in cultural expectations. A 2024 study by the J&K Women’s Commission found:
- 72% of families take loans for dowries, averaging ₹8.5 lakh in cash/gold.
- 54% of grooms demand cars (usually SUVs) as part of dowries.
- ₹25 lakh: Average wedding cost (3x higher than Punjab’s ₹8 lakh).
Home Loans & Dowry Link:
- 41% of home loans are taken to build “dowry houses” for daughters.
- Example: Bashir Ahmed (50) borrowed ₹30 lakh to build a 3-story house for his daughter’s wedding. Now, his ₹42,000 EMI consumes 70% of his pension.
Social Impact: Rising divorces as couples fight over debt. “My in-laws demanded a Maruti Brezza. Now they blame me for the EMIs,” says divorced mother Sana (28).
Youth in the Red: 68% of Under-30s Trapped in Credit Card Cycles
Kashmir’s youth—educated but unemployed—are the hardest hit.
Gen-Z Debt Snapshot:
- 68% have maxed-out credit cards (CRIF High Mark).
- ₹62,000: Average credit card debt (18–30 age group).
- 43% use “Buy Now, Pay Later” for Zara, Swiggy, and travel.
Student Loan Crisis:
- ₹480 crore: Education loans taken in 2024.
- 38% default rate due to 42% graduate unemployment.
Case Study: Engineering grad Ayesha (24) owes ₹5.2 lakh in education loans. She drives a financed Scooty to deliver food for ₹300/day. “My degree is useless,” she says.
When Loans Become Lifelines: Kashmir’s ₹22,000 Crore Personal Debt Bubble
Banks and fintech apps prey on financial illiteracy:
- J&K Bank: Disbursed ₹6,100 crore in personal loans in 2024 (up 144% since 2020).
- Fintech Apps: 18 lakh Kashmiris use apps like Kissht and MoneyTap, paying 28–36% interest.
Home Loan Data:
- ₹4,300 crore: Total home loans in 2024.
- 65% have floating rates; 89% don’t understand rate hikes.
- 12% of borrowers sold ancestral land to repay debt.
Impact: In Budgam, a community of 50 families faces eviction after collectively defaulting on ₹18 crore in home loans. “We were promised ‘dream homes’ but got nightmares,” says resident Fatima.
The Psychology of “Dastaar-e-Consumerism”: Keeping Up Appearances in Cash-Starved Valleys
Psychologists identify a “Dastaar-e-Consumerism” complex—using debt to project success in a conflict-scarred society.
Behavioral Drivers:
- Instagram Envy: 73% of youths compare lifestyles with influencers.
- Post-Trauma Spending: 68% use retail therapy to cope with anxiety.
- Matador Marketing: Ads like “Zameen ka sapna? Home Loan hai na!” (Dream of land? Just get a home loan!) exploit aspirations.
Case Study: Salesman Imran (29) bought a ₹25 lakh Tata Harrier on EMI to impress peers. Now, he skips meals to pay ₹32,000/month. “I’m a laughingstock,” he admits.
Financial Literacy Drought: Only 9% Understand Interest Rates & Credit Scores
Kashmir’s financial illiteracy fuels reckless borrowing:
- 91% don’t know how compound interest works (NITI Aayog).
- 84% believe “minimum credit card payments” are safe.
- 79% sign home loan agreements without reading terms.
Home Loan Blind Spots:
- Floating vs. Fixed Rates: 92% don’t know the difference.
- Processing Fees: 78% were charged hidden fees (avg. ₹52,000).
Impact: Teacher Mohsin (40) took a ₹40 lakh home loan at “12% interest,” unaware it was floating. After RBI hikes, his EMI jumped from ₹38,000 to ₹57,000. “I was tricked,” he says.
Societal Collapse: How Debt Is Fracturing Families and Communities
The debt crisis is corroding Kashmir’s social fabric:
- Mental Health Epidemic:
- 48% increase in depression/anxiety cases linked to debt (SKIMS Hospital).
- 22 suicides in 2024 due to loan defaults (Police data).
- Family Breakdowns:
- 34% rise in divorces over financial disputes (Bar Association of Srinagar).
- Children drop out of school to work (12% in 2024 vs. 6% in 2020).
- Crime Surge:
- 189% increase in thefts/robberies by indebted youth (J&K Police).
- Landlords report tenants fleeing overnight to evade rent.
Case Study: In Sopore, a father-son duo was arrested for stealing ₹4.2 lakh to repay EMIs. “We had no choice,” the son told police.
Road to Recovery: Policy Reforms & Grassroots Solutions
Expert-Backed Strategies:
- Regulate Predatory Lending:
- Cap interest rates at 12% for non-productive loans.
- Ban fintech apps targeting youth with “1-click loans.”
- Debt Relief Programs:
- Waive interest for farmers/low-income groups (model: Kerala’s ₹2,000 crore waiver).
- Introduce govt-backed home loan subsidies for first-time buyers.
- Financial Literacy Revolution:
- School curriculum: Add modules on loans, credit scores, and investments.
- Community workshops led by NGOs like Dastak and Kashmir Finance Hub.
- Cultural Shifts:
- Promote “community weddings” to cut costs.
- Religious leaders to condemn dowry demands in Friday sermons.
Success Story: In Kupwara, 120 families formed a Self-Help Group to repay ₹5.6 crore debt collectively. “We pay 70% less interest now,” says leader Abdul Gani.
The Way Forward
To combat the growing debt trap, Kashmir must focus on fostering financial discipline and awareness among individuals and families:
- Shift Mindset: Encourage the habit of saving and investing for a better future, rather than spending to impress others.
- Asset-Oriented Borrowing: Loans should be directed toward investments that yield financial stability rather than liabilities.
- Financial Literacy Campaigns: Introduce workshops, seminars, and digital tools to improve understanding of money management, interest rates, and debt cycles.
Personal Responsibility: A Choice to Make
The choice lies with individuals:
- Do we continue spending to maintain appearances and risk financial instability?
- Or, do we prioritize saving, investing, and building security for our families?
It’s time to make a conscious decision to shift from reckless spending to deliberate investing.
