BORROWING BOLDLY, SAVING SPARINGLY

Post-pandemic, India's tech-savvy middle class is leveraging bold borrowing trends, balancing premium spending with smarter investments for a bright future

Post-pandemic, there’s been a noticeable shift in how Indians are spending. Saving for the future seems to be slowly losing its appeal, at least according to a recent study by the Non-Banking Financial Company (NBFC) Home Credit India Finance. The study, titled How India Borrows 2024, sheds light on the borrowing habits of Indian consumers across various segments. One of the key takeaways? The borrowing pattern of India’s middle class is definitely worth a second look! The study surveyed 17 major cities and 2,500 borrowers between the ages of 18 and 55. A key point to note is that it focuses on loans that were recently taken out, with borrowers actively repaying them. Here are some key findings from the study:

• The lower-middle-class demographic in India is shifting away from necessity-based borrowing. Instead, they’re focusing more on aspirations, entrepreneurship, and strategic long-term investments.

• The survey revealed that most loans were used to purchase consumer durables, with borrowing for business ventures and home improvements following closely behind. The percentage of loans taken for smartphones and household appliances surged dramatically - from just 1% in 2020 to 37% in 2024. This shows a consistent uptrend in borrowing for modern technology and consumer goods.

• Loans for business expansion and start-ups saw a huge leap, jumping to 21% in 2024 from just 5% in 2020. This is largely due to a rising entrepreneurial spirit, as people sought to explore new revenue streams and opportunities amid the pandemic’s economic changes. Robust government support for micro, small, and medium enterprises (MSMEs) - through credit facilities and subsidies - has further bolstered this trend.