2023: Home Credit India (HCIN), a local arm of the leading global consumer finance provider, released the first edition of its second in-house annual consumer survey – The Indian Wallet Study 2023: Understanding Financial Behaviour & Well-Being of Consumers. The study concluded that consumer sentiments of the low-income population in the urban and semi-urban space is quite buoyant about the economy. As economy is growing, income level has increased for the 52% of the low-income urban consumers last year and 76% are expecting their income to increase in the coming year, with better
saving for 64%.
However, despite increase in income, consumers are highly cautious when it comes to non- essential spending, with 70% saying that such expenses have either not changed or even decreased in the
last year. The study is aimed to comprehensively understand financial habits and sentiments of consumers in the low-income strata within the urban & semi-urban cities. The Indian Wallet Study is an outcome of
randomized survey of approx. 2200 people who have taken loan, are in the age group of 18-55 years with
an annual income of Rs 2 Lakhs to Rs 5 Lakhs, residing across 17 cities including Delhi-NCR, Mumbai,
Kolkata, Bengaluru, Hyderabad, Bhopal, Patna, Ranchi, Ahmedabad, Chandigarh, Chennai, Dehradun,
Jaipur, Lucknow, Ludhiana, Kochi and Pune.
Speaking on launch of the new consumer study, Ashish Tiwari, Chief Marketing Officer, Home Credit India,
said, “We have been keeping a finger on the pulse of consumers and have been publishing a very successful
and sought after annual study “How India Borrows” which is focused about the borrowing behaviour.
However, we did feel that we need to go extra mile to understand the relationship of money with consumers
better. The Indian Wallet Study 2023 is the product of this thought that in post-Covid world, financial
landscape and consumer behaviour has transformed and we need to look at understanding it for the next
billion consumers – urban lower-middle class. The key insights of the first edition of the study, point at the
positive consumer sentiments, spending & savings behaviour, Tier 1 cities becoming income hubs for low- income population and such consumers embracing digital payments well.”
According to the study, the national average of low-income working population is reported to be Rs 30,000per 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 group, with an average monthly income of Rs 42,000, (Rs 12K above national average), surpassing major metros – Delhi (Rs 30,000) and Mumbai (Rs 32,000). Tier 1 cities in South (Bangalore) and West (Pune & 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% of low-income consumers (led by Kolkata 75%,
Jaipur 71%, and Bengaluru 68%), showcase a 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% 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 cost, kids emergency, house expense et al) among low-income consumers. About 70% of them meet their expenses by dipping into their savings. Notably, around 20% 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. 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 cinema are the major recreation or indulgence among the 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 apparels, 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.
The study also explored the contribution of members in the household expenses. In households with
multiple earners, the chief wage earner (CWE) contributes to ~80% of the total household expenses,
underlining their financial responsibility.
On an average, earning male member contributes to 65% in running household. Among the women participants, 57% of the females are chief wage earner (CWE). In HHs with female contribution in expense, they contribute to 49% of the total household expense. Involvement of Gen X in running the household is higher than Gen Z – 74%, compared to 46% for Gen Z.
The Indian Wallet 2023 study also looked into the consumer’s vulnerability to financial fraud and found that over 60% consumers have heard about online fraud instances – 50% of consumers’ have received hoax calls/messages, 20% of these low-income consumers have been its victim, especially Gen Zs and consumers from North and East regions. Fewer people in South India have heard about financial frauds (45%) or received any such hoax calls (32%) or been a victim (16%). Low instances of these cases in South, make them comfortable in keeping sensitive financial information on smartphone, unlike other regions.
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