Only 27.7% of rural households reported an increase in their income compared to previous year, according to the latest survey by the National Bank for Agriculture and Rural Development (NABARD).
This is the lowest proportion of the population stating that their income has increased since NABARD launched the bi-monthly the survey titled ‘Rural Economic Conditions and Sentiments’ since September, 2024. Over 52% of responded households stated that their incomes remained unchanged while 19.8% reported decline in income.
“Reflecting moderation in consumption, the proportion of respondents reporting an elevation in consumption expenditure declined to 74.1%, marking only the second instance since the commencement of the survey that this proportion has fallen below 75%,” the 12th round of survey stated.
In terms of rural household sentiments relating to income and employment prospects during next quarter, only 39.3% of respondents stated that it would improve while 55.4% anticipated no change. The survey noted that expectations relating to income and employment softened compared to earlier rounds, with the proportion of households expecting improvements in both income and employment during the next quarter easing to its lowest level since the inception of the survey.
El Niño Risks Weigh
“The softening of sentiment may be associated with prevailing uncertainties relating to monsoon conditions and broader economic developments,” it stated. The survey has cautioned that anticipated intensification of El Niño conditions poses a downside risk to agricultural production and farm incomes which may adversely affect rural purchasing power and consumption demand in the coming months.
However, household consumption expenditure continued to account for a substantial share (66.5%) of monthly income, while loan repayment (13.5%) and savings (16.8%) had a major share.
Reliance on Informal Credit
On rural credit, around 51% of rural households reported relying exclusively on formal sources of credit in the July 2026 survey round, although this share has moderated from its peak of 58.3% recorded in the November 2025 round. However, the proportion of households relying exclusively on informal sources of credit, especially from friends and families, increased to 23.6%, the highest level observed across all rounds of the surveys.
The survey according to NABARD was conducted against a backdrop of heightened geopolitical tensions, elevated global commodity prices especially fuel and fertilizer as reflected in prevailing global commodity market conditions, and the risk of strong El Niño conditions.
Despite these external headwinds, rural economic conditions remained broadly stable, supported by the progress of the southwest monsoon, ongoing kharif sowing activities, and sustained public expenditure in rural areas, it noted. The survey was conducted during the last few days of June 2026 and the first few days of July 2026.