Blitz Bureau
NEW DELHI: Recent reductions in income tax burdens, benign inflation, lower interest rates and a favourable outlook for agricultural production are expected to support rural incomes and bolster overall consumption in India, according to a new report. Given that private final consumption expenditure constitutes nearly 60 per cent of India’s GDP, it has a strong bearing on India’s overall growth outlook.
A sustained recovery in consumption is also vital for a meaningful pick-up in private sector capital expenditure. “We expect private consumption growth of 6.2 per cent in FY26 compared to an average of 6.7 per cent in the last three years. In the long run, it will be critical to monitor factors impacting household income to ensure healthy growth in private consumption,” said the report by CareEdge Ratings.
While overall consumption growth has remained broadly healthy over the past few years, recent indicators suggest emerging pressures in urban demand, even as rural demand continues to hold firm. Rural consumption is expected to be supported by favourable agricultural output and easing inflation in FY26, the report mentioned.
Recent policy support in the form of RBI rate cuts, reduced tax burdens, and easing inflationary pressures is expected to offer some relief and support to urban consumption in the near term. Moreover, rural consumption could get a further fillip from the likelihood of a good monsoon this year, the report mentioned.
