Summary of this article
Households are directing savings towards essentials and financial security.
Food, education and healthcare are key spending priorities.
GST relief is also boosting confidence around planned borrowing.
India’s lower middle-class households have largely used GST-related price relief to strengthen their finances and meet essential needs, rather than significantly changing their overall spending patterns, according to the Great Indian Wallet Study 2026 by Home Credit India.
Among households that have changed their financial behaviour, saving more and spending more on food quality have emerged as the top choices, at 12 per cent each. Another 9 per cent have spent more on children’s education, while 7 per cent have increased spending on healthcare. Home improvements have accounted for 7 per cent, while 4 per cent each have planned to upgrade a two-wheeler, smartphone or home appliance.
Price Relief Is Visible Across Everyday Purchases
GST-related price relief has been reported across several household spending categories. Two-wheelers have recorded the highest reported reduction at 26 per cent, followed by cars at 25 per cent. Smartphones and home appliances have been next at 22 per cent each, while medicines and healthcare have recorded 21 per cent.
Food, groceries and other daily-use products have seen reported price relief of 19 per cent. Housing materials have recorded 18 per cent.
The impact has also varied across regions. In the East, 25 per cent have reported lower food and grocery prices, while 26 per cent have reported lower smartphone prices and 25 per cent lower prices for medicines and healthcare, stated the report. In the West, the corresponding figures have been 32 per cent for two-wheelers and 29 per cent for cars.
More Room For Family Spending
The additional financial room has also shown up in household priorities. About 62 per cent have reported that they have been able to spend more on family wellbeing, including food, health and education.
The figure has been higher in Tier-1 cities at 71 per cent and in the East at 76 per cent. Patna has recorded 80 per cent, followed by Lucknow at 79 per cent and Ludhiana at 78 per cent.
At the same time, stated the report, 47 per cent have felt better equipped to handle financial emergencies. This has risen to 53 per cent in Tier-1 cities and 54 per cent each in the East and West.
Credit Confidence Rises Alongside Financial Goals
GST-related relief has also coincided with greater confidence around planned borrowing. Some 62 per cent have reported feeling more confident about using credit or EMIs for planned and important purchases. The figure has been 71 per cent in Tier-1 cities and 73 per cent in the East.
Home ownership has emerged as the leading five-year financial goal. Starting or expanding a business and saving for children’s education have also featured among the key priorities.
Access to credit at attractive interest rates and tenure options has been identified by 27 per cent as the most important factor in achieving financial goals. Life insurance and gold investments have accounted for 9 per cent each, followed by health insurance at 7 per cent and fixed deposits at 6 per cent.
Gen Z Has A Different Spending Mix
Age and location have also shaped household budgets. Gen Z has allocated 27 per cent of its wallet to groceries, 10 per cent to medical needs and 7 per cent to utilities.
Discretionary spending has been concentrated around local travel, sightseeing and eating out. Younger consumers and men have reported higher spending in these categories, while larger cities have recorded higher discretionary spending than Tier-2 cities.
