Over 71.8% of rural households expect their income to increase in the next financial year, according to a bi-monthly survey conducted by the National Bank for Agriculture and Rural Development (Nabard) earlier this month.
This represents the lowest level of people expecting their income to rise in the coming year since the March, 2025 round of survey when 72.2% of rural households expected their income to rise.
Over 75.9% respondents expected their income to rise in the November, 2025 round of survey, the highest since it commenced in September, 2024.
Post-Festive Cooling
However, the percentage of households expecting a decrease in income next year fell to only 3.4% in January, 2026, the lowest level recorded. A year ago, 7.4% of rural households reported a fall in income.
The Nabard survey, titled ‘Rural Economic Conditions and Sentiments’, has stated that the percentage of households reporting increased consumption fell to lowest level at 73%, “pointing to likely slackening of rural consumption demand during the last two months,”.
Nabard has stated that the expansionary impact of goods and services tax (GST) rate rationalisation announced in September, 3, 2025 and the subsequent festival season, was visible in the November 2025 round survey results, when 79.2% of rural households had reported increased consumption expenditure in the last one year, highest since survey commenced.
The survey which was conducted during last week of December, 2025 and first week of January, 2026, noted in the next one quarter, the percentage of households expecting income and employment situation to improve fell to their lowest respective levels at 46.4% among all rounds of the survey conducted since September, 2024.
Deflation Paradox
With the softening of food prices over successive months, a section of the rural households seems to have increased the share of their total monthly consumption devoted to food.
The survey stated that the overall share of food in monthly consumption expenditure rose to 55.5%, which is the highest in all the rounds of bi-monthly surveys.
Retail food inflation in India remained in the negative zone (deflation) for the seventh consecutive month in December at (–) 2.71% year-on-year, largely due to high base effect and fall in prices of vegetables and pulses.
On the aspect of rural inflation, the highest percentage of households (87.6%) reported in the latest round of the survey that current inflation as experienced by them has been at or below 5%.
“Close to 55% of the respondents reported taking recourse exclusively to formal sources of credit. Moreover, even when they borrow from informal sources, more than half of such informal borrowings are from friends and relatives”, Nabard has stated.
While the average interest rate on informal credit has been sticky at around 17-18 % , more than one-fourth of the households that borrow from informal sources pay no interest, which could be because they take such loans from friends and relatives.