Why Kashmir’s households are getting entangled in a debt crisis
Srinagar, Aug 31: “Cut your coat according to your cloth.” It’s an old saying, but in Kashmir today, many households seem to have forgotten it. Across the Valley, changing lifestyles and rising aspirations are pushing families into borrowing for cars, weddings, gadgets, and other luxuries—even when incomes remain modest.
With a per capita income of just Rs 1.54 lakh, Kashmir is far from a wealthy region. Jobs in the private sector pay modest salaries, corporate opportunities are scarce, and government employment, though stable, is limited. Despite this, many families are taking on loans to maintain a lifestyle that exceeds their means.
Take the example of Aijaz Ahmad, who works in a private company and earns Rs 30,000 a month. “I have a car loan with an EMI of Rs 7,000, and a consumer loan where I’m paying Rs 6,000 every month. After that, hardly anything is left for household expenses,” he says. “Saving money is out of the question. Sometimes it feels like running in place—no matter how hard I try, I can’t get ahead.”
Financial experts say Kashmir’s debt problem isn’t just about overspending—it’s also about the structure of the economy. “Salaries are low, jobs are few, and the cost of living is rising,” says Farooq Ahmed. “At the same time, people want to keep up with trends they see in bigger cities or on social media. That gap between aspiration and income is what drives borrowing.”
Easy financing by banks and non-banking financial companies (NBFCs), along with documentation-free loans and instant approvals, have made borrowing for cars, electronics, and gadgets extremely tempting. “It’s designed to lure people,” Ahmed says. “When loans are advertised as ‘quick and easy,’ families often don’t stop to calculate how multiple EMIs and high-interest rates will affect their monthly budget. They take the loans thinking it’s manageable, and soon it becomes a burden.”
There’s also a social pressure element. Families feel the need to show success, own the latest phone, or buy a car. Many do not realize how quickly debt can spiral out of control once multiple EMIs pile up.
Weddings are another major trigger. In Kashmir, marriages are not just family affairs—they are public statements of status. Lavish celebrations, designer clothes, imported gifts, and catering often push families to take loans. Parveen Wani, a local employee, shares her experience: “I never thought I’d take a loan for my daughter’s wedding. But with expectations from relatives and friends, it felt like the only option. Now we've been paying EMIs for years.”
The effects of this debt culture are visible everywhere. Families under financial stress struggle to save, cannot invest in property or education, and often postpone essential plans. Young professionals burdened with loans hesitate to start businesses or take risks that could improve their long-term prospects.
Many experts also point to a lack of financial literacy. “Most families don’t fully understand how compound interest works or how small loans add up over time,” says Rafia Mir, a chartered accountant. “Proper financial planning—prioritizing needs over wants, building emergency savings, and borrowing responsibly—is key, but it’s not something everyone knows how to do.”
Unlike some other parts of India, where higher-paying jobs make loans more manageable, Kashmiri households face unique challenges. Without higher income opportunities, better awareness about personal finance, and responsible lending practices, the debt trap is likely to grow.
The old proverb still holds wisdom: cut your coat according to your cloth. For the majority of Kashmir’s households, it’s more than advice—it may be the only way to avoid being buried under a mountain of debt while trying to live a lifestyle they cannot afford.
