How are Indians spending their money? Report reveals a shift towards vehicles, mobile phones & more— here's why

In a major shift in spending patterns, Indian households are investing in durable assets rather than basic necessities, according to a survey report by the Economic Advisory Council to the Prime Minister (EAC-PM).

Households are increasingly directing their spending toward personal goods, cooking, and household appliances, instead of categories such as clothing and footwear, a trend that is evident even among the bottom 40% of households.

“Household spending is shifting from basic necessities like clothing and footwear towards asset-building expenditure on personal goods, and cooking & household appliances,” the report said.

Why are households spending more on asset-building?

The shift in consumption is driven by growing awareness, improved financial access, and market connectivity, which carry significant implications for productivity levels and improvements in overall living standards, the report said.

What are Indians buying?

The survey analysed data from the Household Consumption Expenditure Survey 2011-12 and 2023-24, and found that motor vehicles are the fastest-growing durable asset in the country.

The expansion shows significant urban-rural convergence, affecting both the overall population and the bottom 40% of households in many states. The bottom 40% have made considerable progress in catching up with the broader population, especially in urban areas.

Improved road infrastructure, enhanced market access and wider vehicular financing options are some factors that have enabled this growth.

Meanwhile, the survey noted that television ownership has grown more slowly than other durable goods. In many urban areas across several states, TV ownership has actually decreased among both the overall population and the bottom 40% of the population.

The report highlighted that widespread mobile access has transformed how people consume content, with mobile phones gradually replacing or supporting televisions as the main source of information and entertainment.

The report noted that motor vehicle ownership disparities have decreased steadily in rural areas, but at a significantly faster pace in urban regions. Refrigerator ownership, too, reflects a strong convergence trend, driven largely by urban growth.

Mobile phones have become almost universally adopted among both the top 20% and bottom 40% consumption groups, establishing them as the most equitable durable asset in the country.

Refrigerator ownership increased in rural and urban areas. In rural areas, ownership among the bottom 40% of households grew more than seven times, whereas it more than doubled among the top 20% of households.

Furthermore, the analysis of asset categories owned across consumption groups indicates a growing share of households possessing multiple asset categories in both rural and urban sectors, highlighting a reduction in inter-group consumption disparities.

The report also noted that households without any durable assets now make up only 5% or less across all groups and regions, signalling a significant reduction in asset poverty.

Why is durable asset ownership important?

Ownership of durable assets is strongly linked to modern living standards. It can lead to positive spillovers in areas like time management, women’s participation in the labour force, productivity, and labour mobility.