SDG 1: No Poverty | SDG 8: Decent Work and Economic Growth | SDG 9: Industry, Innovation and Infrastructure
NABARD | Ministry of Rural Development | Ministry of Finance
The ninth round of the Rural Economic Conditions and Sentiments Survey (RECSS), conducted in January 2026, signals a strategic moderation in rural demand following the post-festive and GST rationalization surge seen in late 2025. Rather than indicating economic distress, the data points toward a normalization of spending patterns, with 73% of households reporting higher annual consumption—a slight dip from 79.2% in November but still maintaining a high baseline. Notably, households allocated 68.2% of their monthly income to consumption (Consumption-to-Income ratio), the highest share since September 2024, confirming that rural spending remains a priority driver of the internal economy.
Income Stabilization and Deleveraging Trends
Rural earnings have stabilized at a higher base compared to previous years. While sequential income growth moderated to 39.3%, this remains significantly higher than the 36% recorded in January 2025.
Positive Deleveraging: Borrowing activity fell to 34%, the lowest level in over a year, while 21% of households reported reduced debt, suggesting a healthy deleveraging phase rather than credit averseness.
Investment Confidence: Despite lower credit dependence, 28% of households increased capital investments, reflecting sustained long-term confidence in rural productive assets.
Subsidy Tapering: Government transfers as a share of income continued a tapering trend, falling to 8.66%, as households transition toward market-led earnings.
Inflation Perceptions and Infrastructure Gains
A standout feature of this round is the significant easing of price pressures. Perceived inflation dropped to a multi-round low of 3.38%, with 87.6% of households reporting inflation at or below the 5% mark.
Infrastructure Dividend: Record-high satisfaction with rural infrastructure was recorded at 77.4%, with rural roads consistently identified as the primary catalyst for development, followed by education and water facilities.
Credit Fragmentation: While formal credit access has deepened to 54.6%, the persistent reliance on informal credit (22.5%) at interest rates of 17–18% remains a critical bottleneck for the most vulnerable segments.
What is the significance of the “Consumption-to-Income” ratio in a rural context? The consumption-to-income ratio (currently at 68.2%) measures the portion of a household’s monthly earnings spent on immediate needs rather than saved. While a high ratio indicates strong immediate demand and circulation of money in the rural economy, it also signals a reduced capacity for households to build “financial buffers” or personal savings, making them more dependent on stable future income and government safety nets.
Policy Relevance
The survey findings provide a critical pulse for India’s “last-mile” economic strategy, highlighting that physical infrastructure gains are outpacing financial inclusion depth.
Targeted Credit Reforms: The 17–18% interest rate on informal loans underscores the need for more aggressive KCC (Kisan Credit Card) penetration and the scaling of micro-finance to break the cycle of high-cost debt.
Fiscal Transition: As government transfers taper (8.66%), policy focus must shift toward Productivity Linked Incentives in the non-farm rural sector to maintain the income growth seen in the last year.
Infrastructure-Led Growth: The high satisfaction with rural roads (43.8%) validates continued capital expenditure in the PMGSY (Pradhan Mantri Gram Sadak Yojana) as a proven tool for improving rural market access and planning certainty.
Follow the full report here: RURAL ECONOMIC CONDITIONS & SENTIMENTS SURVEY: Bi-monthly Survey Report Round 9 (January 2026)