NABARD’s RECSS Survey Signals Strong, Broad-Based Revival in Rural Economy

NABARD’s Rural Economic Conditions and Sentiments Survey is conducted every two months across all regions of India.

The eighth round of NABARD’s Rural Economic Conditions and Sentiments Survey (RECSS) presents the most compelling evidence so far of a strong resurgence in rural demand, rising household incomes, enhanced financial behaviour, and improved well-being across India’s villages. Conducted every two months since September 2024, RECSS now provides a rich, year-long dataset that allows policymakers and analysts to track backward-looking economic realities and forward-looking household expectations with unprecedented clarity.

The latest findings confirm that rural India is undergoing a robust and broad-based economic strengthening, supported by buoyant consumption, higher real incomes, moderating inflation, accessible formal credit, welfare transfers, and improving infrastructure.

---

Key Insights from Sept 2024 – Nov 2025: Rural Fundamentals Strengthen Substantially

1. Rural Consumption Surges, Driven by Real Purchasing Power

• Nearly 80% of rural households consistently reported higher consumption across the year—reflecting rising prosperity, not temporary spikes.

• Rural families now spend 67.3% of their monthly income on consumption, the highest recorded share since RECSS began.

• GST rate rationalisation has helped ease costs, sustaining broader consumption demand across food, essentials, and discretionary items.

Implication: Rural demand is not isolated to specific income groups. It demonstrates widespread purchasing power, signalling strong market potential for FMCG, retail, agriculture inputs, and services.

---

2. Highest Income Growth Recorded Since Survey Inception

• 42.2% of households reported income growth—the best performance across all survey rounds.

• Only 15.7% experienced any decline in income, the lowest since the survey began.

• Confidence levels are exceptionally high: 75.9% expect incomes to rise next year, marking the strongest future sentiment in 12 months.

Drivers of income growth include:

• Agricultural resilience supported by MSP revisions, irrigation improvements, and technology adoption

• Non-farm income growth through rural enterprises and services

• Expanded employment through infrastructure and welfare programmes

---

3. Strong Rise in Rural Investment Activity

• 29.3% of households reported increased capital investment in the past year—the highest across all eight rounds.

• Investments are flowing into agriculture equipment, livestock, small enterprises, housing improvements, and digital tools.

• Importantly, this boost in investment is driven by surplus income and confidence, not credit stress.

Outcome: Rural households are building long-term assets, supporting sustained economic resilience.

---

4. Formal Credit Access Hits All-Time High

• 58.3% of rural households accessed only formal credit sources—up sharply from 48.7% in September 2024.

• Informal credit remains at around 20%, signalling progress but also the need for continued financial inclusion measures.

Positive trend: Growing trust in banks, cooperatives, NBFCs, and digital lenders is strengthening rural financial stability.

---

5. Welfare Transfers Strengthen Demand Without Creating Dependency

• Welfare schemes contribute 10% of average monthly household income.

• For some families, transfers exceed 20%, providing stability during income fluctuations.

• Schemes include subsidised food and utilities, DBT benefits, pensions, fertilizer support, school aid and more.

Key takeaway: Welfare support is functioning as consumption insurance, not creating dependency—keeping rural demand stable and reducing vulnerability.

---

6. Inflation Perceptions Drop Sharply, Boosting Real Income

• Inflation perception is now just 3.77%, the lowest in one year.

• 84.2% of households believe inflation is at or below 5%.

• Nearly 90% expect low inflation to continue in the near term.

Effect: Reduced price pressures have increased disposable income, strengthened purchasing power, and improved household welfare.

---

7. Loan Repayment Conditions Improve as Households Gain Stability

• With inflation easing and interest rates stabilising, households are allocating a smaller share of income to debt repayment.

• As credit stress reduces, more families are investing in long-term productive assets.

Reinforces: A virtuous cycle of low inflation → higher real income → stable repayments → higher investment.

---

8. Strong Endorsement of Rural Infrastructure and Basic Services

Rural households report high satisfaction with improvements in:

• Road connectivity

• Education facilities

• Electricity reliability

• Drinking water and health services (also improving steadily)

These enhancements underpin rising incomes and better quality of life, and they support long-term rural prosperity.

---

About the RECSS Survey

NABARD’s Rural Economic Conditions and Sentiments Survey is conducted every two months across all regions of India. It captures:

• Household incomes and consumption

• Perceived and real inflation

• Credit and investment patterns

• Welfare dependence

• Economic expectations for the future

The survey’s high-frequency insights make it a valuable tool for policymakers, financial institutions, and development planners to understand rural realities in real time.