Talking about debt purely, in terms of instant loans, easy loans, cheap credit has spoiled Indian consumer. Unlike US we cannot print money whenever we want to bail out defaults.
Indian banks will continue to push as much credit as they can to trap more assets for interest, that's their business model. But as interest rates go up, it remains to be seen whether people would be able to cope up with the increased EMI. I foresee foreclosures in housing and cars bought with cheap money in the next few months. Layoffs are already in place.
Case in point: Even now that interest rates have risen, I see huge demand for new private cars, fueled by cheap credit where India is majorly a poor country. Even if you look at luxury brand sales, they have shot up post covid all due to cheap credit.
This will have a hard landing with rise in interest rates to tame inflation and rising EMI's. US has infused record dollars into world economy during covid, which has flown over to middle income countries like India resulting in irrational purchases.
Even today a hard landing is necessary to cool off the market and price rise, be it a recession or slowdown.