GST cuts, easing inflation drive rural demand revival

India’s rural economy expanded and recovered strongly in late 2025, with consumption, incomes and investment improving after a key tax reform and as inflation eased, a survey showed.

- Suneera Tandon

Rural consumption surged with 79.2% of households spending more as GST reform, lower prices lifted income share to 67.3%.

So far this year, 79.2% of rural households have increased their consumption spending—the highest in FY26—up from 76.2% in the previous round, according to the November 2025 NABARD RECSS survey. The share of monthly income spent on consumption has also risen to 67.3%, the highest since the survey began, aided by GST rate rationalization.