74% rural households expect income growth in 1 year: Nabard survey

Forecast of 'above normal' southwest monsoon in 2025 that would boost farm growth and rising consumption demand in rural India has fuelled the positive change in the rural sector

Around 74 per cent rural households expect their incomes to increase in the next one year, according to a bi-monthly survey conducted by the National Bank for Agriculture and Rural Development (Nabard) in May 2025. The percentage recorded was 72 in March.

 

This is the highest percentage of people who are expecting a jump in their incomes over the next one year since the start of the bi-monthly Rural Economic Conditions and Sentiments Survey (RECSS) of Nabard in September 2024.

 

The survey has been conducted in 600 villages, covering 6,000 households (10 households from every sample village). In May this year, the fifth round of the survey was conducted.

 

The outcome of the survey showed that not only the number of people expecting a rise in their incomes rose in rural India, but also those who were foreseeing a deterioration in their incomes dropped to 6.7 per cent from 7.3 in the first round of the survey. It had jumped to 7.8 per cent in November 2024. 

 

The rising optimism about income in rural India matches the overall positive sentiment that the rural sector has gained in the last few months. Forecast of “above normal” southwest monsoon in 2025 that would boost farm growth and consumption demand in rural India has fuelled the positive change in the rural sector.

 

A recent report by India Ratings said that real wages were expected to grow at a stable 6.5 per cent year-on-year (Y-o-Y) in 2025-26 (FY26) (from an upwardly estimated 7 per cent in FY25) due to a favourable monsoon-led agriculture growth. It, however, warned that the real wage growth could face downward pressures in case there were any adverse weather shock events or disruption in the spatial progression of the monsoon, and trade or geopolitical issues.

 

Meanwhile, the Nabard report further said that near-term sentiment on income (for the July-September quarter) showed marginal improvement in May, with 53.8 per cent expecting better incomes, compared to 52.5 per cent in March 2025.

 

The employment outlook for the next quarter mirrored a similar trajectory. In May this year, 53.5 per cent of households expected an improvement in employment conditions — the highest since September 2024 — while only 8 per cent foresaw deterioration, resulting in a net positive sentiment of 45.4, the Nabard survey showed. This marked a steady recovery in confidence after a slight dip in January 2025.

 

In May, household incomes showed modest improvement, with 37.4 per cent of them reporting an increase in income over the past year, up from 34.8 per cent in March.

 

Meanwhile, 21.4 per cent said their income had decreased, and 41.3 per cent answered in the negative.

 

On the other hand, consumption patterns remained robust, with 79.1 per cent of households reporting increased spending.

 

Despite a marginal dip from the March figure (79.9 per cent), the net response stayed strong at 74.6, reflecting continued confidence in household demand.

 

In contrast, financial savings sentiment remained subdued. Only 18.8 per cent of households reported an increase in savings while 28.7 per cent saw a decline, resulting in a negative net response of 9.9 per cent.

 

Although this marks a slight improvement from March (-11.9 per cent), savings sentiment has remained in the red for five consecutive rounds of the survey.

 

On borrowings, the survey suggested steady credit demand, with 38.6 per cent of households reporting increased borrowing, and 16.8 per cent noting a decline. The net response held at 21.8 per cent, matching November levels, suggesting stable borrowing patterns against a mildly improving income backdrop.

 

In May, among households that reported an increase in income over the past year, a majority (40.5 per cent) experienced a modest gain of 5-10 per cent while 21.9 per cent saw an increase of up to 5 per cent.

 

Notably, 15.6 per cent of households reported income growth in the 10-15 per cent range, 12 per cent saw 15-20 per cent gains, and 10 per cent registered increases exceeding 20 per cent. The mean increase in income stood at 12.9 per cent, with the median remaining steady at 10 per cent, unchanged over the past five rounds.