A recent report by Perfios and PwC India reveals that salaried Indians allocate over 33% of their income to loan EMIs, reflecting credit-fueled aspirations. Based on data from 30 lakh consumers, 39% of spending goes to obligatory expenses, 32% to necessities, and 29% to discretionary items. Lifestyle purchases dominate discretionary spending, with metro residents spending 6.4% more than those in Tier-3 cities. UPI leads in payments for necessities, while rent and medical expenses are higher in Tier-2 cities, highlighting evolving consumer behavior.
Rising Credit-Driven Consumption Among Salaried Indians: A Positive Outlook on Spending Trends
Salaried individuals across India are allocating over one-third of their monthly income—more than 33%—toward loan EMIs, reflecting the growing dependency on credit to fulfill aspirations and lifestyle needs. This finding comes from a detailed survey conducted recently, shedding light on consumer spending patterns across the nation.
A collaborative report titled "How India Spends: A Deep Dive into Consumer Spending Behavior", released by Perfios, a leading B2B SaaS Fintech company, in partnership with PwC India, offers valuable insights into the spending habits of over 30 lakh tech-savvy individuals. According to the study, 39% of consumer spending is directed toward obligatory expenses, 32% toward necessities, and 29% toward discretionary purchases.
Spending Patterns Across Demographics
The study analyzed spending behaviors across diverse demographics, from Tier-3 cities to metropolitan regions and income brackets ranging between ₹20,000 and ₹1,00,000 per month.
Loan EMIs and Spending Distribution
A considerable portion of income is directed toward loan EMIs irrespective of income levels, highlighting the role of credit in fulfilling aspirations, from homeownership to lifestyle upgrades.
Lifestyle Spending: A Growing Focus
Lifestyle purchases form a significant 62% of discretionary spending, encompassing fashion, personal care, and more. A notable observation is the rise in average spending on lifestyle products in metro cities, with individuals spending ₹2,022 monthly—6.4% more than their counterparts in Tier-3 cities, who spend ₹1,882.
Factors such as growing brand consciousness, increasing access to online shopping platforms, and evolving consumer preferences are driving this trend. "Of all the lifestyle purchases by consumers, 20% is allocated towards fashion. This subcategory includes transactions for purchasing apparel and accessories from designated merchants," the report states. Interestingly, the frequency of fashion shopping remains steady at twice a month across income groups, but the amount spent triples as salaries rise, showcasing aspirational spending among high-income earners.
Dining and Online Gaming: Income Influences
As incomes grow, individuals tend to spend more frequently and significantly on food-related expenses, including dining out and food delivery. Meanwhile, online gaming transactions show a reverse trend—22% of entry-level earners (<₹20,000) engage in gaming-related expenditures, which drops to 12% among individuals earning over ₹75,000 per month.
Payment Preferences: UPI Takes the Lead
The report highlights a shift in payment preferences. While Electronic Clearing Service (ECS) dominates obligatory payments like EMIs, Unified Payments Interface (UPI) is the preferred choice for necessity and discretionary expenses.
Rent and Medical Costs: Regional Insights
Tier-2 cities report a 4.5% higher average rent compared to Tier-1 cities, reflecting growing urbanization in smaller cities. Additionally, medical expenses in Tier-2 cities are 20% higher than in Tier-1 cities, with individuals in Tier-1 cities spending ₹2,450 monthly on average compared to ₹2,048 in metro areas.
Key Highlights
Spending Priorities: Obligatory expenses account for the largest share (39%), followed by necessities (32%) and discretionary purchases (29%).
Online Gaming Trends: Entry-level earners are the most active in online gaming transactions (22%), with a declining trend as income rises.
Housing Costs: Rent is higher in Tier-2 cities by 4.5% compared to Tier-1 cities, indicating changing urban dynamics.
Loan Commitments: Across all city tiers, more than 33% of income is allocated to loan EMIs, showcasing the role of credit in achieving financial goals.
This comprehensive report underscores the evolving spending patterns in India, driven by aspirations, digital penetration, and regional dynamics. While credit-driven consumption is on the rise, it reflects a growing confidence among consumers to invest in their future and elevate their lifestyles.
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