Low-income consumers in urban and semi-urban centres are highly optimistic about the economy in the coming year, with more than three-fourths of this segment among the working population expecting a rise in their income levels, according to a study by Home Credit India.

This is reflected in the first of this kind of financial well-being study — The Indian Wallet Study 2023 — conducted among 2,200 urban lower middle-class consumers who are credit borrowers.

Home Credit India is the local arm of the international consumer finance provider Home Credit International, which entered India in 2012.

The Indian Wallet Study 2023 is aimed at comprehensively understand the financial habits and sentiments of consumers in the low-income strata within urban and semi-urban cities.

The target respondents for this study were in the age bracket of 18–55 years with an annual income between ₹2-5 lakhs and came from 17 major cities in the country.

Not only do the significant majority (76%) of low-income consumers expect their incomes to rise next year, but over 60 per cent claim they would be able to save more (64%).

Tier-1 cities outperform

Notably, Tier-1 cities such as Hyderabad, Pune, Ahmedabad, and Bangalore outperform the four metro cities in terms of monthly income.

“The key insights of the first edition of the study point to positive consumer sentiments, spending, and savings behaviour, Tier-1 cities becoming income hubs for low-income populations, and such consumers embracing digital payments well,” said Ashish Tiwari, Chief Marketing Officer, Home Credit India.

It maybe recalled that Home Credit India already publishes a very successful and sought-after annual study, “How India Borrows,” which is focused on borrowing behaviour. 

As the economy is growing, the income level has increased for 52 per cent of the low-income urban consumers surveyed last year.

However, despite the increase in income, consumers are highly cautious when it comes to non-essential spending, with 70 per cent saying that such expenses have either not changed or even decreased in the last year.

According to the study, the national average of the low-income working population is reported to be ₹30,000 per month, led by metro cities. Interestingly, looking at city-wise data, Tier-1 cities outperform metros, with Hyderabad emerging as the most favorable for low-income groups, with an average monthly income of ₹42,000 (₹12,000 above the national average), surpassing major metros Delhi (₹30,000) and Mumbai (₹32,000). Tier-1 cities in the South (Bengaluru) and West (Pune and Ahmedabad) regions outshine and provide pay parity with respective metros, including Chennai and the financial capital, Mumbai.


On the savings front, the study reveals that nearly 60 per cent of low-income consumers (led by Kolkata at 75 per cent, Jaipur at 71 per cent, and Bengaluru at 68 per cent, showcase prudent financial behaviour by managing to save money after covering major monthly expenses, thereby demonstrating a cash-ready approach even in the low-income segments. As for gender-wise savings, 60% men are saving compared to 52 per cent of women, and more so for Gen Z (62%), than Gen X (53%).

Another crucial aspect highlighted by the study is the coping mechanism for emergency or mandatory expenses (medical costs, kids emergencies, house expenses, et al.) among low-income consumers.

About 70 per cent of them meet their expenses by dipping into their savings. Notably, around 20 per cent opt for financial institutions such as NBFCs, often utilizing this avenue to acquire new consumer durables or home appliances (31%).

In contrast, the reliance on local money lenders is observed to be minimal, with less than 4% resorting to such sources for financial needs.

Wallet share

In terms of wallet share, the study reveals that Grocery (41%), Commute (17%), and Rent (11%), together, account for the lion’s share of 70% of the total wallet, followed by electricity bills and cooking gas.

Local sight-seeing, eating outside, and going to the cinema are the major forms of recreation or indulgence among low-income urbanites. Consumers from Tier 2 cities are more inclined towards discretionary spending than Metros, such as outstation travel (32%), purchasing electronics (32%), and home appliances (16%).

When it comes to shopping habits (for apparel, consumer durables, groceries, medicines, or other consumables), low-income consumers (70%) prefer brick-and-mortar or offline experience; whereas when it comes to paying for the shopping bills or taking loan, the same consumers show affinity towards digital payments (50%+). This behaviour is seen across SECs and largely in Tier 1 & 2 cities, pointing towards a growing acceptance and adoption of digital payments: despite inclination towards traditional shopping.