Lower salary earners spending on essentials, debt servicing: Report

A Perfios-PwC India report shows higher salary bands are allocating a significant portion of their income toward obligatory and discretionary spending

A Perfios-PwC India report on “How India spends: A deep dive into consumer spending behavioúr’ has it that individuals in lower salary brackets are primarily channelling most of their earnings towards meeting essential needs or to service debt. Those in higher salary bands are allocating a significant portion of their income toward obligatory and discretionary spending.

  The dataset analysed in the report comprises tech-savvy borrowers who primarily use FinTech, non-banking financial companies, and other digital platforms. These borrowers were distributed across different geographies (from Tier-3 to metro cities) and income levels - from less than Rs 20,000 to more than Rs 1 lakh. 

 

The percentage of money spent on discretionary expenses increases progressively from entry-level earners to high-income earners, from 22 per cent to 33 per cent. A similar trend is observed for obligatory expenses, where the percentage of spending goes from 34 per cent for entry-level earners to 45 per cent for high-income earners. However, a converse trend is observed for necessity expenses, where the percentage of money spent decreases with an increase in salary: declining from 44 per cent for entry-level earners to 22 per cent for high-income earners.