India's rural consumption sees a rew'val. But is it sustainable?

India's consumer goods giants found an unexpected saviour this past quarter: rural demand.

- Tina Edwin

As urban spending stagnated, strong rural buying helped buffer profits in the July-September period of FY25. From FMCG sales rising at twice the rate in rural areas to a steady climb in two-wheeler and tractor sales, signs of rural resilience are apparent.

Fuelling this revival are higher earnings, supported by the recent hikes in minimum wages and minimum support prices (MSPs), along with a robust monsoon which lifted farmers' spirits. Welfare programmes like state-led cash transfers to women, along with a rise in non-farm activities, also played their part.

The upswing, however, isn't meteoric. Economists including Yuvika Singhal of QuantEco Research caution that rural demand is on a "trajectory of gradual recovery." Inflation looms as a risk, potentially stifling further gains by squeezing household budgets.

Mint delves into the factors behind Indian rural demand's rebound and the challenges it faces going forward.