Indian workers spend third of monthly salary on debt finance

Salaried workers across India spend more than 33% of their monthly income on paying loan EMIs, underlining the growing burden of credit-driven consumption, according to a new survey.

EMIs are equated monthly instalments, a fixed payment amount made by a borrower to a lender at a specified date each calendar month.

B2B SaaS fintech company Perfios has published a report titled ‘How India Spends: A Deep Dive into Consumer Spending Behaviour’, in conjunction with along with PwC India. Based on a comprehensive study of “tech-savvy consumers”, it found that 39% of consumers’ total spending goes toward obligatory expenditures, followed by 32% on necessities and 29% on discretionary spending.

The study encompasses a wide range of income groups across India, ranging from Rs 20,000 (£185) to Rs 100,000 (£925) per month.

It found that a significant 62% of discretionary spending is directed toward lifestyle products, including fashion and personal care items. There is a 6.4% increase in the average amount spent on lifestyle purchases by a person living in a large metropolitan area, which is Rs 2,022, compared to that spent by a person residing in a Tier-3 city, where this figure is Rs 1,882 monthly. Tier-3 cities are defined as cities with a population ranging between 20,000 to 49,999.

Some of the factors that influence the lifestyle-related shopping behaviour of people include consumer preference, brand consciousness, access to products and online shopping. The number of online shoppers is growing in India, the survey said.

“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 survey said. “An interesting observation is that the frequency of consumer spending on fashion shopping remains relatively consistent at about twice a month across different salary buckets. However, the actual amount spent increases threefold from entry-level earners to high-income earners.”

It also found that as individuals’ salaries increase, so do both the amount and frequency of spending on food-related expenses, such as dining out or ordering food.

And the percentage of entry-level earners (those people earning less that Rs 20,000 per month) engaging in online gaming transactions stands at 22%, a figure that decreases to 12% as income rises to above Rs 75,000 per month.

The average rent expenditure in Tier-2 cities is 4.5% higher than in Tier-1 cities, and individuals in Tier-2 cities spend 20% more on medical expenses than their Tier-1 counterparts. On average, a person in a Tier-1 city spends Rs 2,450 per month on medical expenses, while those in metropolitan areas spend the least, averaging Rs 2,048. Indian cities with a population of 50,000 to 99,999 are termed Tier-2 cities; Tier-1 cities are those with a population above 100,000 people.

The joint survey also found that the average total amount spent on house rent is 4.5% higher in Tier-2 cities than in Tier-1 cities.

RBI launches finance app

The Reserve Bank of India (RBI) has launched mobile app, called ‘RBIDATA’, which will provide access to more than 11,000 different series of economic data related to the Indian economy.

The app offers macroeconomic and financial statistics relating to the Indian economy in a user-friendly and visually engaging format, Reserve Bank of India (RBI) said in a statement.

Users will be able to view time series data in graphs/charts and download data for analysis. There will also be details such as data source, unit of measurement, frequency and recent updates.

Furthermore, the app’s ‘Banking Outlet’ section will help users find banking facilities within 20 kilometres of their location and they can also access data about South Asian Association for Regional Cooperation (SAARC) countries through the ‘SAARC Finance’ section. SAARC is a regional intergovernmental organisation and geopolitical union of states in South Asia.

According to the central bank’s statement, the app will offer access to over 11,000 different series of economic data to give a comprehensive view of the Indian economy.

“This app offers quick access to the Database on the Indian Economy (https://data.rbi.org.in) portal and aims to serve the researchers, students and the general public,” it said.