Check, Check, Check: How America and India Learned to Run on Debt — and Taught Their Citizens the Same

There is a number that should have stopped the world's traffic this week, and it passed with barely a shrug: the national debt of the United States crossed $40 trillion. Not the size of its economy — its debt. And here is the sentence that turns the number into a story: America has added roughly as much debt in the last ten years as it accumulated in its entire previous history. From George Washington to 2016 — through a civil war, two world wars, the Depression, the Cold War and the 2008 crash — the republic amassed about $19–20 trillion of obligations. From 2016 to 2026, in one placid decade of mostly peace and mostly growth, it added the same amount again. The last three administrations alone — Trump's first term (about $7.8 trillion), Biden's (about $8.5 trillion), and Trump's second (already past $3.5 trillion in eighteen months) — piled on roughly $20 trillion between them. The debt now works out to about $116,000 per American, $295,000 per household, growing by roughly $8 billion a day. Interest costs have crossed a trillion dollars a year — more than America spends on defence.

India's version is smaller in dollars and identical in shape. The Centre's public debt has tripled in a decade — from ₹64 lakh crore at the end of 2014-15 to ₹201 lakh crore at the end of 2025-26, growing at nearly 11% a year — faster than the economy grew over the decade as a whole, which is why the Centre's debt-to-GDP ratio drifted up from about 52% to 58% even as it improved after the Covid peak. Add the states, and India's combined government debt sits around 82% of GDP. The interest bill tells the sharper truth: the Union Budget now allocates ₹12.74 lakh crore a year for interest payments alone — more than the defence, education and health budgets combined, consuming about 37% of the Centre's net tax revenue. Before a single road is laid or a single teacher paid, more than a third of every tax rupee has already been spent — on the past.

How the state's habit became the citizen's habit

Does any of this reach the ordinary citizen's kitchen table? Directly and doubly — through the economy, and through the mind.

The economic transmission is mechanical. Governments that borrow gigantically keep money loose and normalise leverage; interest gets baked into everything. The American consumer lives the consequence: US household debt has itself hit record highs above $18 trillion — a trillion-plus on credit cards at 20%-plus interest, $1.7 trillion in student loans, car loans stretched to seven years, buy-now-pay-later attached to groceries. The personal savings rate hovers around 4–5%, roughly half its historic norm. The median American household, like its government, spends first and finances the gap.

India ran the same script on fast-forward. As the sovereign tripled its debt, Indian households executed the identical manoeuvre in miniature: household debt jumped from about 37% of GDP to a record 45.5% in just four years, while net financial savings crashed to five-decade lows. The ₹9,800 app loan, the phone on 24 EMIs, the credit card minimum due — the citizen's balance sheet became a scale model of the Budget: rising obligations, shrinking cushions, interest quietly eating the future's lunch.

Which direction does the influence flow? Honestly, both. The state teaches by example: when the most respected institution in the land runs permanent deficits and calls it normal, thrift loses its moral prestige; a culture that once feared the moneylender learned, in one decade, to celebrate the credit limit. But citizens teach the state too: voters reward spending and punish austerity, in Washington and Delhi alike, so every administration — regardless of party, in both democracies — finds borrowing the path of least resistance. Debt is what democracies do when they want to give without taking. The government and the household are not two stories. They are one habit, wearing two sizes.

Why, as general financial practice, this is wrong — and worrisome

Strip away the macroeconomics and apply the test any grandmother would: are you borrowing to build, or borrowing to live? Borrowing to build — a highway, a factory, a degree, a home — creates the income that repays the loan. Borrowing to live — to cover routine expenses, to consume today what you'll earn tomorrow, to pay interest with new principal — is the definition of decline on an instalment plan.

Both countries fail parts of this test. America's recent trillions bought mostly consumption and tax cuts, not assets; its own budget office now projects debt reaching 120% of GDP by 2036 — beyond any level in its history — with warnings of a "debt spiral" once interest rates outrun growth rates in the 2030s. The compounding is merciless: at a trillion dollars a year, interest is now the fastest-growing "programme" in the US budget, crowding out everything a society actually wants. India's position is better but not innocent: an interest bill larger than defence, education and health combined is a country pre-spending its children's taxes; and the fiscal rulebooks (the FRBM's original targets) have been honoured mostly in postponement. For households, the verdict is cleaner still: record debt against record-low savings is wrong by every rule of financial practice ever written, because a balance sheet with no cushion converts any shock — a job loss, an illness, a rate rise — into a crisis. What is worrisome is not the size of the numbers but the normalisation: an entire generation, in both countries, that has never seen its government balance a budget and increasingly does not balance its own.

The silver lining — real, but conditional

And yet an honest conclusion cannot be all gloom, because debt is a tool before it is a vice. Three genuine positives deserve their place. First, some of this borrowing built things: nearly half of India's net borrowing over the decade — about ₹60 lakh crore — went into capital expenditure, the highways, ports and rail that are visibly compounding into growth; and India's debt is 95% in its own currency, its debt-to-GDP ratio actually declining from the Covid peak because the economy is outgrowing the interest rate — the one arithmetic that makes debt sustainable. Second, crisis borrowing worked: the pandemic response in both countries — vaccines, food support, payrolls — was debt well spent; refusing to borrow in 2020 would have been the greater sin. Third, at the citizen level, the credit revolution has a democratic face: the farmer who once faced the 3%-a-month moneylender now gets a regulated loan; first-generation students, entrepreneurs and homeowners exist because credit reached them. Access to debt is development; only addiction to it is disease.

So the conclusion is a conditional one, and worth stating plainly. Debt is positive when it buys assets that outearn its interest, when it is denominated in your own strength, and when it comes with a repayment culture — and it is corrosive when it merely finances the gap between what we earn and how we wish to live. By that standard, America's decade fails the test more than it passes, India's passes more than it fails but is drifting, and households in both countries are on the wrong side of the line. The way back is not the abolition of borrowing but the restoration of its purpose: governments that borrow for the balance sheet, not the ballot; citizens who borrow for the asset, not the appetite; and both remembering the oldest rule in finance, which no reserve currency and no election can repeal — that debt defers the bill, it never cancels it. The countries and the families that thrive in the 2030s will be the ones that remembered this in the 2020s, while the meter was still readable.