Inside The Wallet Of Indians; 42 Per Cent Show Increased Interest In ‘Credit On UPI’

The Financial Well-Being Index among urban and semi-urban consumers has increased over the past year, both in terms of current status and future perception, according to a study by Home Credit India, a consumer finance provider firm. The survey titled ‘Great Indian Wallet Study: Consumer Behaviour towards key financial aspects’ found that the buoyancy in consumer sentiment is being fuelled by an upward growth trajectory in the Indian economy, an increase in earning capacity, and a positive perception of income growth. It also finds that the income growth has kept pace with the increase in expenses of individuals over the past year.

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Here’s an outlook on the financial landscape of consumers across various segments such as spending, savings, and buying:

The study conducted across 17 cities including Delhi-NCR, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Ahmedabad, Pune, Lucknow, Jaipur, Bhopal, Patna, Ranchi, Chandigarh, Dehradun, Ludhiana and Kochi covered a sample size of around 2,500 people between the age group of 18-55 years, with an annual income between Rs 2 lakhs to Rs 5 lakhs.

Personal Monthly Income

The average personal monthly income of individuals in 2024 stands at Rs 35,000 in metros and Rs 32,000 in tier 1 & 2 cities.

The numbers show a rise from Rs 33,000 (Metros), Rs 30,000 (Tier 1), and Rs 27,000 (Tier 2) from last year. Among metros and tier 1 cities - Bangalore, Hyderabad, and Pune were seen as significant hubs offering newer and better possibilities for consumers seeking an upgrade.

These cities saw an increase in income levels, with Bangalore and Hyderabad leading as top performers with incomes 15 per cent and 33 per cent higher than the national average, respectively.

Income and expenses

The personal monthly income of lower-middle-class individuals is credited around Rs 33,000 while monthly expenses stand at Rs 19,000 in 2024. The study finds that the growth in income over the past year has kept pace with the increase in expenses.

Grocery and rent continue to dominate the primary expenses of individuals, followed by commute, children’s education, and medical expenditures:

Grocery - 26%

Rent - 21%

Commute - 19%

Children’s Education - 15%

Medical Expenses - 7%

Electricity Bills - 6%

Cooking Gas - 4%

Mobile Bills - 2%

It was found that Chennai pays the highest rent at 29 per cent, while Kolkata and Jaipur pay the lowest at 15 per cent. People in Bengaluru and Kochi spend the most on children’s education, almost 23 per cent of their income. Dehradun showed the highest medical expenses, taking out as much as 13 per cent of consumers’ income.

Discretionary Spends: Across 17 cities covered in the survey, Chennai leads as the city where people are most happy spending money on nonessential expenses such as travel or sightseeing (59 per cent), dining out (54 per cent), and watching movies outside (55 per cent).

Around 60 per cent of people spent their income on fast fashion items like apparel and accessories in 2024 wherein Gen Z showed more preference for buying fashion products and electronics.

Household Expenses: Consumers showed a remarkable increase in expenditures related to household expenses with an average uptick of 6 per cent. As per the survey, in households with more than one earning member, the chief wage earner (CWE) contributed almost 80 per cent of the total household expenses while non-CWE contributed 20 per cent. It was found that 42 per cent of the women are CWE in their respective households.

Savings’ Outlook

Around 60 per cent of consumers prefer to build a cash reserve to address emergency expenses post covering monthly fixed expenses.

Men outpace Women in savings at 62 and 50 per cent, respectively. Gen Z showed a stronger will to save (68 per cent) as compared to Millennials (62 per cent) and Gen X (53 per cent).

Frequent Financial Frauds

A tell-tale of financial risk hovering above consumers was backed by the survey wherein one-fifth of consumers (21 per cent) said that they have been a victim of financial fraud in the past year. Among all 17 cities, Delhi, Kolkata, Hyderabad, and Pune reported a greater prevalence of financial fraud incidents.

The study says that around 19 per cent of consumers store their financial data on their smartphones. Against the basic understanding of cyber awareness, the study finds that around 24 per cent shared their sensitive data with their friends and family.

Widespread usage of UPI flags another need for sensitisation against cyber risks. As per the survey, 72 per cent of individuals currently use UPI majority of them including men, Gen Z, and metro residents.

Growing interest for ‘Credit on UPI’

The study found that around 42 per cent of consumers particularly men, Gen Z, and tier 1 consumers, showed more preference to use Credit on UPI.

Less timeframe in availing loans, ease of payments at retail stores, chances of getting good offers, and lower charges are some of the reasons behind consumers' preference for Credit on UPI.