Where People Spend Money in India?

There is an interesting report of hindustantimes (HT) which speaks about where people spend money in India.

This report talks about spending habits of all category of people residing in India.

I found this report of HT worth a mention in my blog. In fact I will suggest my readers to read this report of HT to get more insights. 

Based on the data published by HT (sourced from World Bank), I would also like to present my observations

This report is not just for India. Spending pattern of people residing in 50+ developing countries has been presented. 

Few prominent ones are as below:

  • Asia: China, India, Indonesia, etc.
  • Africa: Nigeria, Egypt, Morocco, etc.
  • Europe: Belarus, Bulgaria, Romania etc.
  • North America: Guatemala, Honduras etc.
  • South America: Brazil, Mexico, Peru etc.
  • Oceania: Fiji, Papua New Guinea etc.

Expense Categories.

This report has sorted all possible expenses under 12 broad categories. 

These categories will represent consumption pattern of all developing countries. 

World Bank collects consumption data from individual countries.

Once the data is collected, they are processed and presented it in a standard format.

Creation of expense categories by World Bank is done for the purpose of standardisation of the final report. 

Standardisation helps in data-comparison of different countries. 

Expense categories are as below:

  1. Food and Beverages.
  2. Clothing and Footwear.
  3. Housing.
  4. Energy.
  5. Transport.
  6. Water Utility.
  7. Education.
  8. Health.
  9. ICT.
  10. Financial Services.
  11. Personal Care.
  12. Others.

Consumer Categories.

To get a more useful and in-depth view on the consumption pattern, creation of consumer categories are great.

How the World Bank has created the consumer categories? Based on a global income distribution data.

Based on this data, everyone in the world can be categorised based on their level of spendings ($PPP).

Based on this, there are 4 categories of consumers:

  • Lowest Spending People.
  • Low Spending People. 
  • Middle Spending People.
  • High Spending People. 

What does these consumer say about them?

Lowest Spending People spend $2.97/day (average). It means, they spend close to Rs.25,702 in one year.

Low Spending People spend between $2.97- $8.44/day (average). It means, they spend between Rs.25,702 – Rs.73,036 in one year.

Middle Spending People spend between $8.44- $23.03/day (average). It means, they spend between Rs.73,036 – Rs.1,99,290 in one year.

High Spending People spend more than $23.03/day (average). It means, they spend more than Rs.1,99,290 in one year.

Based on the World Bank’s report, the composition of consumer in developing economy are like this:

  • Lowest Spending – they constitute 50% of the total population.
  • Low Spending – they are 25% of the total population.
  • Middle Spending – they are 15% of the total population.
  • High Spending – they are 10% of the total population.

What does the above value suggest about India’s spending pattern?

How to Convert $PPP/day to Rs./year? Use world Bank’s formula.

Use this formula: $PPP x 1.117 x 21.226 x 365. So what it means when World Bank say that lowest spending people spend less than $2.97/day?

It means low spending people spend less than Rs.70.417/day (2.97 x 1.117 x 21.226 x 365 = 25,702).

Overall view

As per 2010 data, total consumption in India has been been Rs.21,679 Billion

Out of these Rs.21,679 Billion, who contributes the maximum?

I must confess here that, I was surprised to see the result.

I always assumed that high spending people must be contributing most. But according to World Bank data, the opposite was true.

Lowest spending people, who spend only Rs.70.417/day contributes 60% of the total spendings in India.

What does the above chart represent?

Small transactions of less than Rs.70/day, contributes 60% to the total spendings in India.

Similarly, bigger expenses of people, in tune of Rs.546/day, contributes only 0.31% of total spendings in India. 

Where People Spend Money in India?

On which expense category, people spend most in India?

World Bank has prepared a list of 12 expense categories. 

Lets see where people in India spends the most.

SLExpense CategoryIndiaChina
1Food & Beverages44.63%36.22%
5Clothing & Footwear5.98%9.03%
9Information and Communication Technology3.27%8.55%
10Personal Care2.39%0.25%
11Water Utility0.24%0.53%
12Financial Services0.04%0.78%



Household people in India spends maximum on Foods.

44.63% of all spendings by Indians are on food items.

No doubt why there are so many small and big food joints in India.

The next item on which household India spends maximum is on purchase of house.

12.47% of all spendings by Indians are on housing sector. 

What does it mean? Most of the people in India are busy earning money to pay their home loan EMI’s.

How we can use this data for our benefit?

This is a general data. Hence it only typically represents the spending habits of Indians. 

But in terms of personal finance, people can glance at the results roughly, and estimate where their maximum money is getting spent.

This is the expense category which needs to budgeted and tracked

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  1. Great ! a full picture of spending of a indian , i can understand my spending habits ,loan liability and see dream of debt free soon.
    Thank you for sharing valuable information.

  2. Nice things we found in your blog has so many valuable things we found and also my site provide corporates and market new and basic knowledge about law and SEBI. please visit my site

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