Explanation – The increasing share of consumption loans is considered unhealthy for economic growth because it can reduce the income multiplier effect. When consumption loans rise excessively, households may devote a larger portion of their income to debt repayment rather than spending on goods and services. This reduces the ripple effect of spending through the economy, which is central to the multiplier effect. Additionally, excessive reliance on consumption loans can lead to imbalances in the economy, weakening long-term investment and sustainable growth.

Source: The Hindu