Revised Rural Sentiment Index Signals Consumption‑Led Growth In India

The NABARD July 2025 RECSS shows that 76.6% of rural households reported an increase in consumption, reinforcing a consumption‑driven growth trajectory.

Inflation concerns have eased markedly, with 78.4% of households perceiving current inflation to be at or below 5%, reflecting improved price stability.

Official data aligns with these sentiments: CPI‑rural inflation declined from 3.25% in March to 2.59% in May, while food inflation fell to 1.36% in May, indicating softer price pressures in recent months.

The survey also revealed improvements in financial well‑being: 20.6% of households reported higher savings, while 52.6% borrowed exclusively from formal institutions.

Among informal credit sources, friends and relatives surpassed reliance on moneylenders in terms of usage.

Meanwhile, the average interest rate on informal credit declined by around 30 basis points, reflecting a gradual relief from high borrowing costs.

It is important to note that this survey captures only informal lending rates, excluding formal sources such as banks.

Strong Optimism and Supportive Transfers

Rural households remain optimistic: 74.7% expect income growth in the year ahead, and 56.2% anticipate better job prospects in the short term.

Government fiscal transfers continue to play a vital role in supporting spending and resilience.

Subsidies on food, electricity, cooking gas, fertilisers, education, transport, meals, pensions, and interest support now contribute about 10% of a household’s monthly income on average.

The survey also reflects growing satisfaction with local infrastructure: only 2.6% of households reported any decline, suggesting stability or improvement in services such as roads, electricity, water supply, healthcare, and education.

The NABARD RECSS findings paint an encouraging picture of India’s rural economy: stronger consumption, easing inflation, improved financial inclusion, and rising optimism, all supported by robust fiscal transfers and better infrastructure.

These trends reinforce the resilience and potential of rural households as vital contributors to national growth.

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