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India's Young Spenders

If there is a severe economic slowdown, some Indian economists worry that young people may be most affected. Many 20- and 30-somethings have amassed debt during the boom years. Their generation is also particularly vulnerable to advertising for costly "aspiration products," such as flat-screen TVs, washing machines and air conditioners. In India, even the lowest credit card interest rates hover around 20 percent, and the average lending rate is 34 percent, which includes a 12 percent service tax on the interest.

"It's like there is a constant sword dangling on your head," said Sunil Sethi, chief executive of Alliance Merchandise, a buying agent for international clothing and fabric.

Indians have traditionally put an emphasis on savings, but the old rules no longer stick there, either, said Vishesh Chandiok, a partner with Grant Thornton, a financial firm. Savings can be wiped out quickly.

"Now you can spend $10,000 on a car," Chandiok said. "It can be fairly dangerous for people who don't know the ways of credit card expenditures and charge more than what is in line with their income -- especially in India, when credit card companies are calling you five times a day."

Pratik Dogra, a 21-year-old sportswriter in New Delhi, is among those who might be in trouble. Dogra loves to eat at hip restaurants, buy imported clothing and watch cricket matches at pubs with his friends. He said he almost always puts the drinks, sports gear and meals on his credit card.

He typically racks up about $250 in charges a month, slightly more than he earns. He said he was "totally broke but happy." He is living with his parents, so for now, anyway, he can keep on enjoying life in Youngistan.

"I haven't told my parents yet that I'm an active -- very active -- credit card user," said Dogra, looking slightly guilty. "Because I know the lectures I'll get on saving. Besides, I can't tell them. They might take it away from me."

Special correspondent Ayesha Manocha in New Delhi contributed to this report.


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