Source: BS
Context:
The National Bank for Agriculture and Rural Development (NABARD) has released the findings of its 7th bi-monthly rural economic conditions and sentiment survey (September 2025). The report shows weakening confidence among rural households, largely due to the impact of steep US tariffs on Indian exports imposed by President Donald Trump.
Rural Income Sentiment Weakens
- In July 2025, nearly 75% of rural households expected their incomes to rise in the next year.
- By September 2025, this figure fell to 72.8%.
- Short-term optimism also declined: 51.6% expect income improvement in the next quarter, compared to 56.4% in July.
Key Factor: US Tariffs
- Trump’s 50% tariff on Indian goods—covering 55% of India’s shipments to the US—is among the steepest globally.
- Sectors with strong rural linkages such as seafood exports are directly hit, dampening rural confidence.
Borrowing Behaviour and Credit Trends
- 54.5% of rural households now borrow exclusively from formal sources (highest since survey inception).
- 20% rely solely on informal credit, with over half borrowing from friends and relatives.
- Interest rates on informal loans remain high:
- Average: 17–18%
- Median: 12%
- One-third pay above 20%, while ~30% pay no interest (family/friend lending).
Income and Inflation Perceptions
- Among households reporting higher income over the past year, average earnings rose 12.8%, up from earlier rounds.
- Inflation expectations eased further:
- Average perceived inflation: 4.09% (down ~150 basis points since Nov 2024).
- Median inflation perception: 3%.
Rural Development Priorities
- Road infrastructure topped rural development satisfaction rankings: 45.3% households highlighted improvement.
- Followed by:
- Education (12%)
- Electricity (8.7%)
