India’s consumer spending shifts: Over 33% of income goes to loan EMIs

As private consumption continues to rise across India, earning individuals in cities of all tiers are allocating more than 33% of their income towards loan EMIs, according to a report released on Wednesday by B2B fintech company Perfios and PwC India.

Breakdown of spending patterns

The report highlights that the largest share of spending, 39%, goes toward obligatory expenditures such as loan repayments and household essentials. This is followed by 32% for necessity expenditures and 29% for discretionary expenses. Notably, more than 62% of discretionary spending is directed toward lifestyle-related purchases, including fashion and personal care items.

Impact of income on spending habits

As salaries increase from entry-level to high-income earners, spending on food—both through dining out and food deliveries—also rises in both amount and frequency. The study further reveals that individuals in Tier-2 cities spend an average of 4.5% more on house rent than those in Tier-1 cities.

Healthcare expenses vary across city tiers

Medical expenses also vary significantly across city categories. Residents of Tier-2 cities spend 20% more on healthcare compared to those in Tier-1 cities. On average, a person in a Tier-1 city spends around ₹2,450 per month on medical expenses, whereas metro dwellers record the lowest average at ₹2,048 per month.

Changing market trends

Commenting on the findings, Perfios CEO Sabyasachi Goswami said, “India’s consumer market is undergoing a transformation driven by a rising middle class, growing rural markets, and a digitally connected, aspirational population.”

Mihir Gandhi, Partner and Leader of Payments Transformation at PwC India, emphasized that the report aims to help businesses, policymakers, and financial institutions understand shifting consumer behaviors to make informed decisions in an evolving marketplace.

The study analyzed the spending patterns of 30 lakh tech-savvy consumers across India, providing valuable insights into the country’s changing financial habits.