New Delhi, December 11 (HS): A two-month survey conducted by the National Bank for Agriculture and Rural Development (NABARD) has revealed remarkable improvements in the fundamental structure of India’s rural economy. Rising incomes have fuelled strong optimism among rural households, with nearly 80% reporting consistent growth in consumption over the past year.

According to the 8th Rural Economic Conditions & Sentiments Survey (RECSS), rural India has shown clear signs of rising demand, higher incomes and improved living standards in the last one year. The survey highlights notable strengthening in the rural economy’s base between September 2024 and November 2025. Increased consumption, rising incomes, easing inflation and stronger financial discipline are driving this progress, supported by sustained welfare assistance and robust public investment.

The survey shows that rural households now spend 67.3% of their monthly income on consumption — the highest level since these surveys began, aided in part by improved GST rates. About 42.2% of households reported an increase in income, the best performance across all rounds of the survey, while only 15.7% reported any decline — the lowest on record. Future expectations remain highly positive, with 75.9% expecting their income to rise next year — the strongest sentiment since September 2024.

Capital investment has also strengthened, with 29.3% of rural households reporting higher investment compared to last year, reflecting renewed asset creation in both farm and non-farm sectors. This investment growth is driven by higher income and consumption, not by debt distress.

Dependence on formal lending has risen to its highest level, with 58.3% of rural households using only formal credit sources, up from 48.7% in September 2024. However, informal credit still accounts for around 20%, indicating the need to further expand access to formal finance.

About 10% of average monthly income is effectively supplemented through subsidised food, electricity, water, LPG, fertilisers, school assistance, pensions, transport benefits and other welfare transfers. For some families, these transfers exceed 20% of their total income, helping stabilise rural demand. Inflation perception has fallen to 3.77%, dipping below 4% for the first time since the survey began. Nearly 90% expect inflation to remain below 5% going forward, contributing to higher real income and greater purchasing power.

With lower inflation and softer interest rates, the share of income used for loan repayment has also declined. Rural households expressed high satisfaction with improvements in roads, education, electricity, drinking water and healthcare — all contributing to increased incomes and long-term prosperity.

NABARD conducts the Rural Economic Conditions & Sentiments Survey every two months, capturing household-level data on income, consumption, inflation, credit, investment and expectations. It now provides a year-round dataset enabling realistic assessment of rural economic changes based on past trends and future sentiments.

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Hindusthan Samachar / Jun Sarkar