tgnns logo

The Economics of Urban India A Detailed Analysis of Spending Habits in Hyderabad

The Economics of Urban India A Detailed Analysis of Spending Habits in Hyderabad

The Economics of Urban India A Detailed Analysis of Spending Habits in Hyderabad, How do urban Indians manage their earnings? What are the major expenses that consume their income? Home Credit India conducted an extensive study across 17 cities in the country, titled “The Great Indian Wallet,” to delve into these questions.

Rising Costs: Rent and Education Top the List

Despite the hope for increasing incomes, urban residents are facing higher expenditures. The survey revealed that in Hyderabad, the average monthly income increased from ₹42,000 to ₹44,000 in 2023. However, expenses have outpaced income growth, with monthly expenditures rising from ₹19,000 to ₹24,000.

A significant portion of this income goes towards essential expenses. Rent and groceries account for 21% of the income, while 17% is spent on children’s education. These essentials form a large part of the household budget.

Discretionary Spending: Travel and Dining

Urban Indians also indulge in discretionary spending. According to the study, 35% of the discretionary budget is spent on travel and vacations, reflecting a growing interest in exploring new places. Additionally, 28% of the income is allocated to dining out, indicating a preference for experiencing diverse cuisines.

Entertainment is another notable expense. People spend 19% of their income on movies and 10% on OTT (over-the-top) entertainment platforms. This shows a strong inclination towards various forms of digital and cinematic entertainment.

Health and Fitness: A Priority for Many

Interestingly, fitness and health-related expenses account for 6% of the income. This demonstrates that many individuals prioritize maintaining a healthy lifestyle, even if it means spending a part of their earnings on fitness-related activities.

Online Security: A Growing Concern

With the increasing reliance on online transactions, awareness about online financial fraud is on the rise. The survey highlighted that 41% of participants are aware of online financial fraud, and 27% have experienced it firsthand. This underscores the need for enhanced online security measures.

Furthermore, 64% of respondents expressed their willingness to stop using UPI services if they were charged for them. This indicates a strong preference for free digital payment services.

Optimism for the Future: Anticipated Income Growth

Despite current financial challenges, there is optimism for the future among urban residents. About 74% of the respondents believe that their income will increase in the coming years. Additionally, 66% reported that they are able to save money, suggesting a trend towards financial prudence.

Understanding India’s Middle Class: Income as a Key Indicator

Identifying with the middle class is common in India, even among top officials. Finance Minister Nirmala Sitharaman, for instance, considers herself a member of this demographic. But if we use income as the sole parameter, a Member of Parliament, who earns approximately ₹2.3 lakh per month (including all allowances), with an annual income of close to ₹27 lakh, might still be seen as middle class in this context. This raises the question: where do the rest of us stand?

The Reality of India’s Middle Class

The middle class in India is often romanticized, with its struggles and aspirations depicted in literature and cinema. However, determining who truly belongs to this group can be complex. Various criteria such as assets, wealth, and income are used, but income is the most commonly favored metric due to its availability and correlation with other socioeconomic indicators like education, housing, and consumer preferences.

Self-Identification vs. Economic Reality

Interestingly, about 50% of Indians self-identify as middle class, according to a survey by the Centre of Advanced Studies of India (CASI). However, Pew Research indicates that only 2% of Indians are genuinely middle income, a figure that has been shrinking, especially due to the economic impacts of the COVID-19 pandemic. In 2020, India’s middle class declined from 9.9 crore to 6.6 crore.

Income Categories Defined

To clarify, middle income and middle class are not synonymous. Pew Research categorizes the population into five groups based on daily per capita income:

  • Poor: Living on $2 or less per day (around ₹150).
  • Low Income: $2 to $10 per day (₹150 to ₹700).
  • Middle Income: $10 to $20 per day (₹700 to ₹1,500).
  • Upper Middle Income and High Income: More than ₹1,500 per day.

According to Pew, up to 95% of Indians fall into the poor or low-income categories, while only 2% are middle income.

Historical Context and Misconceptions

The notion of a burgeoning middle class gained traction when poverty rates significantly declined in the early 2000s. It was assumed that many who were previously poor had moved up to the middle class. However, Pew’s data reveals that while poverty did decrease, most of those who moved up only reached the low-income category. This misperception has led to failed investments by international companies targeting a middle class that is smaller and more urban-centric than anticipated.

Income Inequality in India

A report by the World Inequality Database highlights extreme income inequality in India. In 2021, an annual income of ₹18.6 lakh would place an individual in the top 1% of the country. Conversely, an annual income of ₹1.5 lakh categorizes a person as middle income. The top 10% of households hold 57% of the national income, while the top 1% alone holds 22%. In contrast, the middle 40% share just 30% of the total national income.

The Impact of the Pandemic

The pandemic exacerbated income inequality, with the number of billionaires in India rising from 40 to 142 in 2021, while the middle class continued to shrink. More people fell into the low-income category or below the poverty line.

The Role of the Middle Class in Society

Despite its relatively small size, the middle class plays a crucial role in driving policy changes and economic development. This group is characterized by higher consumption, significant contributions to savings and human capital, and a pervasive sense of optimism. They are the white-collar workers, the regular theater-goers, the Starbucks patrons, and the frequent vacationers.


While the middle class in India is smaller than commonly perceived, its influence is substantial. Understanding the true size and economic realities of this demographic is essential for accurate policy making and business strategies. For further insights into economic trends and data, continue following Money Control.

The “Great Indian Wallet” study by Home Credit India offers valuable insights into the spending habits and financial priorities of urban Indians. With rising incomes, higher expenses, and a growing focus on discretionary spending and online security, urban residents are navigating a complex financial landscape. As they look forward to future income growth, their spending patterns reflect a blend of essential expenses and lifestyle choices.

Related Articles

Ladli Behna Awas Yojana 2023 సైబర్ నేరాలపై పోలీసుల వినూత్న ప్రచారం Telangana Police Ram Gopal Varma’s 9 Critical Questions for Pawan Kalyan Reliance Foundation Scholarships 2023 Chandrababu Naidu’s Arrest: A Storm in Andhra Pradesh