Moneycontrol Pro Panorama| Why Bharat is Bullish

Global growth is wobbling, rattled by trade tensions and financial market jitters.

Dear Reader, 

I’m sure you would agree — India’s villages have long been the heartbeat of its economy, pumping life into consumer demand and shaping market trends far beyond the glitzy metro hubs.

What rural households spend on, how they perceive inflation, and whether they believe tomorrow will bring better wages or jobs — These are not just local concerns but national bellwethers.

It is in this context one may find it useful to take a closer look at the latest findings from the Rural Consumer Confidence Survey (RCCS) of the Reserve Bank of India (RBI).

Since 2022, rural households have weathered economic turbulence — think supply chain snags, erratic monsoons, and stubborn food price spikes — with remarkable grit.

The survey’s Current Situation Index, a measure of how rural folk view their present economic reality, has clawed its way back from the doldrums, now hovering around neutral territory.

Employment conditions, a perennial worry in villages where jobs are often tied to the whims of agriculture, are also seen in a better light. This isn’t a full-throated cheer for prosperity; setbacks have punctuated the recovery. But the trajectory is clear: Rural India is finding its footing.

What’s even more striking is the unwavering optimism about the future. The Future Expectations Index, which captures rural households’ hopes for the coming year, radiates steady confidence. At the heart of this is a belief that incomes will rise.

In a country where rural earnings are often at the mercy of unpredictable harvests or volatile global commodity prices, this faith in better days is no small thing. It’s a signal that rural India isn’t just surviving — It’s daring to dream.

What does the spending pattern say?

Spending patterns tell a similar tale of resilience. Rural households have kept their wallets open, primarily for essentials like food, healthcare, and education — non-negotiables that anchor family life.

But there’s more: non-essential spending, on things like consumer durables or small indulgences, is creeping up.

Don’t mistake this as the reckless splurging of boom times, but a measured expansion of economic horizons, a sign that rural consumers are holding their own despite a tough global backdrop.

Inflation, the spectre that haunts every Indian kitchen, remains a sore point.

Rural perceptions of current price pressures have eased since 2022, though occasional jolts from soaring food prices — think onions or pulses — have kept nerves on edge.

Encouragingly, expectations of future inflation are also cooling, albeit more slowly. This matters because runaway inflation expectations can spiral into reality as households hoard or demand higher wages.

The fact that rural India is beginning to trust that price stability is within reach is a quiet win for the RBI’s inflation-targeting regime, which saw headline inflation drop to a 67-month low of 3.3 percent in March 2025, largely due to softer food prices.

But not all is well though…

However, the broader economic context, as laid out in the RBI’s latest state of the economy report, isn’t exactly rosy. Global growth is wobbling, rattled by trade tensions and financial market jitters. For an export-dependent economy like India, this spells trouble.

Yet, the RBI notes that India’s domestic engines — consumption and investment — are less vulnerable to these external gusts.

Rural India, with its robust spending and buoyant income expectations, is a big part of that resilience.

Add to that the forecast of an above-normal southwest monsoon in 2025, which could fatten farm incomes and keep food inflation in check, and you have a rural economy poised to be a bulwark against global headwinds.

Given these data points, the RBI can now fine-tune monetary policy with a clearer sense of how rural consumers are coping with interest rates or credit access. Fiscal planners, too, can take cues — say, by channelising funds into rural infrastructure or skilling programmes to harness that optimism about future incomes. 

Meanwhile, PMI numbers on a strong footing…

Equally encouraging for the policymakers are the latest PMI numbers. India’s private sector activity started the fiscal year on a strong footing, with the Purchasing Managers’ Index rising to an eight-month high of 60 in April from 59.5 in the previous month, according to data released by HSBC on April 23.

The HSBC Flash India Composite PMI stayed above the 59 mark for the second consecutive month, after staying below that number for two consecutive months in January and February.

That’s not all on the plate today. Shishir Asthana writes how a falling market and tighter regulations impacted brokers and Manas Chakravarty takes a look at an IMF report on how Trump’s tariff gamble impacted different countries. That apart, there’s more on the plate on the gold rush and the incredible rise of Indian fintechs.

Investing insights from our research team HCL Tech Q4 FY25: Standing tall amid the macro chaosAU SFB Q4 FY25 – Will the stock rerate?Havells India wraps up FY25 with strong earnings in Q4Cyient DLM: Near-term revival appears unlikelyMahindra Finance’s re-rating hinges on diversification strategy, steady credit cost

Pro Tracker

Pro Economic Tracker: Auto sales, consumer sentiment weaken, labour participation improves marginally

What else are we reading? Pahalgam terror attack leaves Kashmiris in a bind, loans to repay and a tourist season blown awayAre the steel dumping duties too little, too late?Chart of the Day | RBI's LCR overhaul aims to fortify banks in a digital eraHow to think about returns in a bear market (republished from the FT)China’s façade of neutrality in Russia-Ukraine conflictIndia’s make-or-break moment to ignite a manufacturing revolutionTechnical Picks: HINDUNILVR, ALKEM, INFY

Dinesh Unnikrishnan Moneycontrol Pro