Rural India seeing strong consumption, income growth, NABARD survey shows

NABARD survey shows 42.2% of rural households experienced income growth in October-November.

Rural demand is seeing a broad-based revival, a rise in income and improved household well-being over the past year, the finance ministry said on December 11.

About 80 percent of rural households have consistently reported higher consumption over the previous year, the finance ministry, citing the eighth round of NABARD’s Rural Economic Conditions and Sentiments Survey, said.

Around 67.3 percent of monthly income is now being spent on consumption, the highest share since the survey began, aided by GST rate rationalisation, the finance ministry said.

“This demonstrates strong, broad-based demand, not sporadic or concentrated in specific segments,” it said.

The survey was conducted in the last week of October and the first week of November. The National Bank for Agriculture and Rural Development (NABARD) has a sample size of 6,000 households.

“The past one year has seen a clear strengthening of rural economic fundamentals. With robust consumption, rising incomes, moderating inflation and healthier financial behaviour, rural India is on a positive trajectory,” the ministry said.

“Sustained welfare support and strong public investment are reinforcing this momentum,” the ministry said.

The survey found that 42.2 percent of rural households experienced income growth in October-November and just 15.7 percent reported an income decline, the lowest recorded so far.

The outlook for rural households is “exceptionally strong”, and 75.9 percent expect incomes to rise next year — the highest level of optimism since September 2024.

Around 29.3 percent of households increased capital investment over the past year - more than any previous round, showing renewed asset creation in farming and non-farm sectors.

“The pick-up in investment is driven by strong consumption and income gains, not credit stress,” the ministry said.

On rural credit, the survey found that 58.3 percent of rural households have accessed only formal sources of credit, the highest so far among all rounds of this survey, up from 48.7 percent in September, 2024.

“However, the share of informal credit is about 20%, underscoring the need for continued push for deeper formal credit penetration,” the ministry said.

It said 10 percent of the average monthly income is effectively supplemented through welfare transfers such as subsidised food, electricity, water, cooking gas, fertilizers, school support, pensions, transport benefits and more. “For some households, transfers exceed 20 percent of total income, providing essential consumption support and helping stabilise rural demand,” it said.