'70% of Indians Spend Entire Income on Essentials'. Indus Valley Report Reveals Discretionary Spending Crisis

Moneylife Digital Team 14 August 2025

Economy & Nation

A staggering one billion Indians, nearly three-quarters of the population, are left with no money for discretionary spending after meeting their basic needs, according to the Indus Valley Annual Report 2025, published by Blume Ventures. The report paints a sobering picture of the financial health of Indian households, revealing that most are operating on razor-thin margins, with rising costs of food, housing, healthcare and education consuming their entire incomes.

The study, based on a nationwide survey of income and expenditure patterns, highlights how the so-called 'consumption-driven economy' is increasingly reliant on a shrinking middle class with disposable income. For the majority, wages barely cover essentials, leaving nothing for leisure, savings, or non-essential goods.

According to the findings, over 70% of households spend almost all their earnings on essentials such as groceries, rent, utilities and basic healthcare. Even minor expenses like dining out, buying new clothes, or taking short trips are now beyond the reach of most families. The report notes that this erosion of discretionary spending is not limited to rural areas but is also affecting urban and semi-urban households, particularly in the lower-middle-income segments.

The collapse in discretionary spending stems from a combination of persistent inflation in essential goods and stagnant wage growth. Food prices, especially for staples like pulses, vegetables, and dairy, have climbed significantly, while housing and education costs continue to rise faster than incomes. For many, the COVID-19 pandemic’s financial scars remain unhealed, and debt burdens have worsened, further limiting their capacity to spend, the report says.

The report warns that without relief measures, the slowdown in non-essential consumption could have severe consequences for sectors like retail, tourism, hospitality and consumer goods, all of which rely heavily on household spending beyond basic needs.

Discretionary spending is often a bellwether for economic health, fuelling industries that drive growth and job creation. The absence of such spending among a billion Indians signals a worrying contraction in domestic demand. Small businesses, especially in the service and lifestyle sectors, are already reporting reduced sales, while manufacturers of consumer durables face falling order volumes.

Indus Valley’s analysis points out that the problem is not only about poverty in the traditional sense but also about the financial squeeze on those above the official poverty line. The so-called 'aspiring class', households that previously spent on branded goods, occasional vacations, or personal gadgets, is rapidly shrinking.

The report calls for urgent policy interventions to address income stagnation and the high cost of living. Suggestions include targeted tax relief for low- and middle-income households, increased social security coverage, and measures to curb price volatility in essential commodities. It also advocates for job creation in sectors with higher wage potential and for improving access to affordable credit to stimulate small-scale entrepreneurship.

Beyond the statistics, the findings underscore a growing sense of economic insecurity. For many families, financial planning has been reduced to surviving month-to-month, with aspirations for better housing, higher education for children, or improved living standards indefinitely postponed.

As the Indus Valley Annual Report warns, “When a billion citizens can no longer participate in the non-essential economy, the ripple effects will be felt across every sector — from industry to innovation. The challenge for policymakers is to restore not just incomes, but hope.”

Comments

User

rajiv.pec

11 months ago

It is ironical that S & P raises the rating of India (14.8.25 report) to stable as per the reports whereas the Blume Report points to basic fact that 70% of the population cannot even afford discretionary spending & the third factor to consider is that the SIPs in mutual funds are ever increasing therefore very difficult to comprehend where lies the truth. Does everyone have their own agenda to set the narrative & truth is lost & not visible at all. Is statistical abuse in full display everywhere but no one is bothered at all?

gopalakrishnan.tv

11 months ago

Very sad and sorry to read the finding of the survey report that even after 78 years after independence , 70 % of the people are not to able to afford to have discretionary spending and are having hand to mouth existence spending all their earnings mostly on food and other essentials . This only reflects on the mismanagement of the economy and unfair and inequitable distribution of wealth without any justifiable and valid reasons . The gap between the rich and poor has been widening and unfortunately the 70 % has to manage even the 30 % well off is what it all means in essence .,Thus is very pathetic and does not stand any ethics , or values or any justification . We are very very far off from the dream of dream of Ache Din and the so called universal welfare for all . It is high time to have a serious introspection and review of all policies particularly economic policies particularly taxation policies .

badhri9984

11 months ago

India under saffron brigade leader Modi regime lopsided economy and common man economic hardships hitting the roof. Skyrocketing rates of essentials beyond the reach of common people in our society.

parimalshah1

11 months ago

Report prepared using so called reliable figures from so called reliable sources, totally misleading. Look at the number of window ACs and TV antenna in a slum area and that facts are entirely different. Such belittling new reports will now keep sprouting like mushrooms at behest of Soros, Pitroda, Trump is dump and other ant-India agencies propagated by the mafia family of India to destabilise the system and create anarchy in the country. Why are people on bail not put in Jail? Is judiciary too becoming a party to the anarchy scheme? Looks like CIA and deep states are at serious work. The home ministers job is very demanding now.

badhri9984

Replied to parimalshah1 comment 11 months ago

Digital warrior of ruling clique doing good job to satisfy to whom. God alone knows.