Indian Earners Devote Over 33% of Income to Loan EMIs: Study
Click to start listening
Synopsis
A recent report indicates that individuals in India are allocating over 33% of their income to loan EMIs, highlighting a shift in consumer behavior driven by rising private consumption across various city tiers.
Key Takeaways
- Over 33% of income is spent on loan EMIs.
- 39% of spending is on mandatory expenses.
- Discretionary spending is largely on lifestyle items.
- Tier 2 city housing costs are 4.5% higher than tier 1.
- Medical expenses are 20% more in tier 2 cities.
Bengaluru, Feb 19 (NationPress) With the rise of private consumption in India, workers from various city tiers are dedicating over 33% of their earnings (on average) to settle loan EMIs, according to a report released on Wednesday.
The report, conducted by B2B fintech firm Perfios and PwC India, reveals that individuals prioritize their mandatory expenditures, which make up 39% of their overall spending, followed by 32% allocated to essential needs and 29% towards discretionary expenses.
It was noted that more than 62% of discretionary spending goes towards lifestyle items, which encompass purchases related to fashion and personal care.
As salaries progress from entry-level to higher income brackets, both the overall spending on food (whether dining out or ordering) and the frequency of such expenditures increase.
Moreover, the average amount spent on housing is 4.5% higher in tier 2 cities compared to tier 1 cities, as indicated by the report.
When it comes to medical costs, residents of tier 2 cities incur 20% more monthly than their tier 1 counterparts.
On average, a person in a tier 1 city spends nearly Rs 2,450 per month on medical expenses, while those in metropolitan areas have the lowest average at Rs 2,048 per month, as per the findings.
“India’s consumer sector is experiencing a shift, driven by the growing middle class, expanding rural markets, and an increasingly digital, aspirational populace,” stated Sabyasachi Goswami, CEO of Perfios.
Mihir Gandhi, Partner and Leader of Payments Transformation at PwC India, noted that the report aims to assist businesses, policymakers, and financial institutions in grasping the changing consumer landscape and making data-driven choices in a fluctuating market.
The study analyzed the spending habits of 30 lakh tech-savvy consumers nationwide.
