Rising incomes boost hopes of India's lower middle class, survey finds

Home Credit India's latest survey finds rising income, digital adoption, and focus on education driving optimism among lower-middle-class Indians despite financial pressures

India’s lower middle class households are confident about achieving their key financial goals within the next five years, according to the third edition of Home Credit India’s survey, The Great Indian Wallet 2025. 

Nearly 73 per cent of the respondents showed optimism in the company’s Financial Well-Being Index. The “future expectations” score of this index remains strong at 59, which, according to the lender, indicates that rising prices have not shaken consumers’ long-term confidence. 

  People are feeling more positive, thanks in part to rising household incomes. This year, 57 per cent of respondents said their household earned more, up from 52 per cent in 2024. “When we started ‘The Great Indian Wallet Study’ in 2023, we sought to understand the financial pulse of India. What we discovered was a nation of quiet revolutionaries — millions of households transforming constraints into stepping stones, challenges into opportunities,” said Ashish Tiwari, chief marketing officer, Home Credit India. “This year’s findings reveal something extraordinary: despite economic headwinds, India’s lower middle class is more optimistic, more digital, and more determined than ever before,” he said. 

 

 

  ‘The Great Indian Wallet 2025’ surveyed 3,000 consumers aged 18 to 55 across 17 locations — Delhi NCR, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Jaipur, Pune and nine Tier-II cities — between February and April 2025. Quotas ensured representation of lower middle class households (monthly income ₹25,000 ₹45,000), covering roughly two thirds of the national population by income bands.

 

Balancing income, expenses remains a tightrope

On average, families in the segment earn about ₹33,000 a month and spend ₹20,000 on essentials. Yet saving is proving harder: only half of the respondents managed to put money aside, down from 60 per cent last year. Signs of stress include the 12 per cent who reported borrowing simply to meet basic needs. 

But regional disparities persist. Metropolitan residents enjoy higher pay packets (₹36,000) but shoulder bigger bills (₹23,000), while Tier-II households make do with ₹30,000 in income and ₹17,000 in expenses. Meanwhile, financial responsibility within families is broadening, with men now contributing 74 per cent of household outlays and GenZ members chipping in 61 per cent.

 

Groceries still rule, education surges

Groceries remain the single largest budget item, swallowing 29 per cent of monthly outgo — 12 percentage points more than a year ago. But education is the fastest rising priority: spending on schooling jumped 34 per cent and now claims 19 per cent of the wallet, underlining parents’ determination to secure a better future for their children. GenX respondents devote the most to education, at 22 per cent of their monthly spending.   

 

Aspirations reshape discretionary spends

Lifestyle choices are shifting from conspicuous consumption to value driven experiences. Local travel is the new indulgence, with 31 per cent of households taking short trips at least once a month — GenZ accounts for nearly half of these jaunts. Fashion purchases remain common (39 per cent), but that share has fallen 20 percentage points, suggesting a swing to need based buying. Emerging categories such as fitness memberships (7 per cent) and over the top (OTT) content subscriptions (6 per cent) hint at a broader quest for personal enrichment.

 

Digital leap — and digital risks

Digital tools are also becoming indispensable. Around 63 per cent of respondents say apps and online platforms make it easier to chase financial goals. Online retail now handles 51 per cent of purchases, up nine points in a year, and digital loan applications are neck and neck with offline channels at 50 per cent. Unified Payments Interface (UPI) remains the gateway to this ecosystem, used by four in five consumers. 

Although many people are aware of online financial frauds, a significant number still store sensitive information on their phones. And some have already faced financial losses. These findings highlight the urgent need for better digital literacy and safer financial habits.

 

Affordable credit fuels rising aspirations

Entrepreneurship, home ownership and children’s education top the aspiration chart. More than a quarter of respondents (28 per cent) view affordable credit as the crucial enabler, and two thirds believe it will speed up their journey. Anxiety remains around rising education costs (18 per cent) and inadequate emergency savings (15 per cent), and 58 per cent actively seek financial advice — especially women, who link better job prospects to family prosperity.