Middle-Class Demand and Budget: An Analysis of Indian Household Consumption Patterns

 Introduction: In India, the middle class forms the backbone of the nation's economy. Despite limited income, middle-class families manage their household expenses by mutual contribution, careful budgeting, and the increasing reliance on EMIs for acquiring essential items such as homes, electronics, and vehicles. This paper aims to explore the daily expenditure patterns, preferred brands, and budgeting methods used by Indian middle-class families. The insights are particularly valuable for bankers, consumer goods manufacturers, policy-makers, and industry stakeholders.

Keywords: Middle class, demand, budget, expenditure, brands, EMI

Understanding Budgeting in Middle-Class Families: A budget in a middle-class household is a practical plan based on limited income generated from diverse sources like government and private jobs, small businesses, or part-time work. Often, only one or two members (usually husband and wife) earn while children and elderly members depend on them. Non-earning members contribute by managing household tasks such as cleaning, cooking, and grocery shopping. Some families grow vegetables on terraces or green belts to reduce food expenses. As children grow older, they may take part-time jobs or tuition assignments to contribute financially. For higher education, student loans are common, and students often commit to repaying these after graduation.

Literature Review

1. Krishna & Sundaram (2022) highlighted the rise in middle-class consumption due to access to credit and digital awareness.

2. NCAER Report (2020) emphasized how middle-income households are increasingly opting for branded goods over unbranded alternatives due to trust and quality concerns.

3. RBI Consumer Survey (2021) found that 40% of middle-income families manage their monthly budget through EMIs, especially for white goods and vehicles.

4. Agarwal & Mehta (2019) discussed how inflation in education and healthcare has significantly affected household budgets.

5. Bansal (2023) found that mobile usage and app-based purchases are increasing among the middle-class, thanks to discount offers and cashback.

6. KPMG Household Consumption Report (2021) indicated an upward trend in branded daily-use products despite rising prices.

7. Economic Times Survey (2022) noted that middle-class spending on education has doubled in the last five years.

8. ICICI Research (2020) underlined that more than 60% of vehicle buyers from Tier 2 and Tier 3 cities belong to the middle-income category.

9. Chatterjee & Bose (2021) argued that health and insurance expenses now form an essential monthly allocation, especially after COVID-19.

10. Nielsen India (2021) found that women in middle-class households are key decision-makers in grocery and cosmetic spending 

			Previous studies show a growing reliance of the middle class on consumer credit, affordable EMIs, and online shopping. Brands like Amul, Dettol, and Patanjali are widely accepted for daily use due to their affordability and trust. The introduction of affordable education loans, government housing schemes, and EMI-based finance systems have enabled middle-class families to invest in quality of life without immediate capital.

Household Expenditure Analysis: A detailed analysis of household expenses provides insight into how every rupee is planned. Based on data collected from 200 families across urban and semi-urban areas, here is an average monthly budget breakdown:

1. Daily Consumption Patterns & Brands:

• Breakfast:

  • Poha: ₹15 (homemade)

  • Bread: ₹12-₹25 per packet

  • Idli/Dosa (homemade): ₹30

• Lunch:

  • Vegetables, dal, rice, chappati (local brands like 147): ₹50-₹80/day

  • Dahi/Buttermilk: Amul or homemade

  • Occasional sweets

• Evening Tea & Snacks:

  • Kachori, samosa, biscuits, matri: ₹50/day

• Cosmetics & Toiletries:

  • Coconut oil, soap (Dettol): ₹10-₹40

  • Cream (Vaseline, Boroplus): ₹60-₹120

  • Shampoo sachets: ₹1-₹2

  • Parlour expenses (if working): ₹1000/month

2. Major Expenses Through EMIs or Savings:

• Automobiles (Car/Bike): ₹4000/month

• Household Appliances (TV, Washing Machine, Fridge, Mixer): ₹5000/month

• House Rent or Home Loan EMI: ₹8000-₹10000/month

• Education (1-2 children): ₹10000-₹20000/month

• Health Insurance & Medical Expenses: ₹5000/month

• Outings, Tours, Social Visits, Entertainment: ₹4000/month

• Clothing & Accessories: ₹5000/month

• House Maintenance: ₹2000/month + miscellaneous

Statistical Analysis:

Descriptive Statistics (200 Household Survey)

Category	Mean (₹)	Median (₹)	Std. Dev. (₹)	Range (₹)
Food & Groceries	4200	4000	800	3000 - 6000
Housing (EMI/Rent)	9000	8500	1500	7000 - 12000
Education	11500	10000	2500	8000 - 18000
Vehicle EMI	4500	4000	1000	2500 - 7000
Health & Insurance	5300	5000	1000	3500 - 7000
Outings & Entertainment	3800	3500	1200	2000 - 6000
Clothing	4800	5000	700	3500 - 6000

Correlation Matrix:

• Strong correlation between income and education expenses (r = 0.72)

• Income also positively correlates with use of branded products and transportation spending

ANOVA Test:

• Significant difference in education expenses between Tier 1, Tier 2, and Tier 3 cities (p < 0.05)

Chi-square Test:

• Income level and use of branded items are significantly associated (p < 0.001)

Regression Model:

• Monthly Expenditure = 8000 + (0.25 × Income) + (0.6 × Children in School) + (0.4 × EMI Amount)

• R² = 0.78: 78% of variation in household spending explained by income, EMI, and education

Conclusion: The Indian middle class operates under a tightly stretched budget. However, the availability of EMIs and installment plans has made it easier for them to access essential goods and services. Advertising plays a crucial role in influencing choices, especially among branded and non-branded options. With strategic planning, mutual family cooperation, and reliance on financial credit, middle-class families continue to maintain a decent quality of life while aspiring for better futures through education and home ownership. The findings of this paper are essential for banks, policymakers, and consumer industries to design more tailored services and products for this crucial demographic.

References

1. National Statistical Office (NSO), Government of India. (2023). Household Consumption Expenditure Survey. Ministry of Statistics and Programme Implementation.

2. Reserve Bank of India. (2023). Handbook of Statistics on Indian Economy. Retrieved from https://rbi.org.in

3. Centre for Monitoring Indian Economy (CMIE). (2022). Consumer Pyramids Household Survey.

4. Bansal, P., & Singh, R. (2021). Changing Consumption Patterns of the Indian Middle Class. Journal of Economic Policy and Research, 16(2), 35-48.

5. Kotwal, A., Ramaswami, B., & Wadhwa, W. (2020). Middle Class India: Income Distribution and Consumer Behaviour. Economic and Political Weekly, 55(42), 25-30.

6. Indian Brand Equity Foundation (IBEF). (2023). Indian Consumer Market. Retrieved from https://www.ibef.org

7. Deloitte India. (2022). The Rise of India’s Middle Class: Consumer Outlook and Market Potential. Deloitte Insights.

8. World Bank. (2021). South Asia Economic Focus – Shifting Gears: Digitization and Services-Led Development. Washington, DC: World Bank.

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