NEW DELHI: In the past two months, Ravinder Raina tossed and turned on many sleepless nights trying to re-do the math of his family’s monthly expenses.

Rising mortgage payments, soaring inflation and fuel prices were beginning to put the squeeze on the spending spree he’d taken for granted for the past four years. So after painstaking discussions with his wife, he drew up a list of expenses to cut. The family would stop buying famous-brand clothes. They would not window-shop if they did not need anything. They would use credit cards less and replace their gasoline-fuelled car and with a vehicle that uses cheaper natural gas.

The most difficult decision, he said, was to cut down on outings. “Weekends were for indulging our daughter, spending time with her and enjoying. Watching a movie, shopping and trying out a different restaurant each time,” said Raina, 44 and a manager of a company that owns upscale hotels and spas.

The past four years have brought India economic growth of seemingly unstoppable momentum, often nine per cent a year, helped along by big inflows of foreign investment. Rising incomes and low interest rates enabled many middle-class Indians to realise the dream of owning a home, even while still in their 30s.

But economists warned that the economy was overheating, producing inflation and speculative bubbles in real estate and the stock market. So government policymakers moved to cool things down by raising interest rates and tightening the rules for home loans. Taken along with the general global slowdown and spiraling fuel costs, the measures have had the intended effect.

On Wednesday, the government projected the growth rate would fall this year to 7.7 per cent, compared to nearly 9 per cent last year. Industrial output slipped to its lowest in six years, growing 5.4 per cent in June, compared to 8.9 per cent in the same month last year.

Trapped in debt, many middle-class Indians are struggling to cope. Raina’s monthly mortgage payment has gone up by 12 per cent. “I have to cut corners now, or I may not be able to pay back my loan before retirement,” he said. Payments on some loans have doubled since 2004, when interest rates were at a record low.

“The boom of the last four years mesmerized them to live beyond their means,” said Deepak Raheja, a therapist who runs a support group called the Hope Foundation. “In the past 10 weeks, I am getting five to six new patients every week with financial worries about mortgages, loan repayments and credit card bills. All in the age group of 25 to 40. They exhibit anxiety, helplessness and depression. Some even contemplate suicide.”

A senior government economic official acknowledged that inflation, now at 12 per cent, a 13-year high, has exceeded the tolerance level of many Indians. But he said that the government’s moves are having the desired and ultimately positive effect.

“The monetary policy actions that have been taken during the past 12 to 18 months, following the financial crises in the West, have dampened the overheated land markets,” said Arvind Virmani, chief economic adviser in the government in an email. “Some effect on consumer credit and related purchases of durable goods is also to be expected. The 93 per cent rise in oil prices has however made it extremely challenging to manage inflation and growth.”

Marketing and retail brand strategist Harish Bijoor says that Indians are now buying, vacationing and dining out less. In Mumbai, the country’s unofficial commercial capital, the frequency of dining out has dropped by a third in the past three months.

“The Indian middle class is now deferring purchase decisions because they are locked in the rising mortgage trap from multiple loans. They did not anticipate this cash crunch. They thought India’s growth story would only go up, up and up,” Bijoor said. “They are no longer eagerly replacing their television sets, washing machines, refrigerators and cars for newer models in the market.”

In a bid to get rid of piling-up inventory, many stores are offering mega discounts with signs on their windows saying “Beat the Inflation”.

The impact on working-class Indians has often been more profound.

The downturn has put the brakes on Ramakant Mohanta’s aspirations of social mobility. Eight years ago, Mohanta, 35, left his impoverished village in eastern India to become a driver in New Delhi. Living in a slum, he worked hard to send his seven-year old son to a good school in the city.

This summer, he pulled his son out of the school and sent his family back to the village.

“The price rise hit us very hard. I lost all the progress I made in the last few years. I could not afford my son’s school fee any more,” said Mohanta, a tall, rail-thin man. “I dreamt of a different life for my son, but that dream has broken into pieces.”—Dawn/ The LAT-WP News Service (c) The Washington Post