The report famous that rural consumption has been on a gradual upward development for the reason that second half of FY25, strengthening additional in 2QFY26 with a 7.7 per cent year-on-year progress, the very best stage in 17 quarters.
“We noticed that rural consumption continues to outperform city consumption regardless of the revenue tax cuts and GST 2.0 reforms, that are geared toward boosting city consumption. Undoubtedly, city consumption has recovered since twenty second Sep'25 and likewise from 3QFY25; however rural consumption outshines due to revenue assure schemes, higher rainfall outcomes, NBFC-led credit score progress, easing enter prices and regular MSPs,” the report added.
This upturn, MOFSL mentioned, was supported by agency progress in actual agricultural and non-agricultural wages, increased tractor and fertiliser gross sales, strong farm credit score, and higher rainfall distribution that improved sowing exercise. Steady minimal help costs (MSPs) and easing enter prices additionally contributed to stronger farm incomes.
In distinction, city consumption remained subdued in 2QFY26, forward of the festive season, although indicators equivalent to private credit score progress, petrol demand, and non-farm imports mirrored continued resilience in discretionary spending. Passenger visitors, nonetheless, stayed largely flat.
MOFSL expects city demand to enhance in 3QFY26, helped by GST 2.0 implementation and the passthrough of current worth cuts. The brokerage's retail channel checks point out a constructive turnaround in choose city classes — with autos and jewellery performing effectively, whereas footwear, paints, FMCG, and textiles confirmed blended restoration traits.Inside FMCG, normal commerce suggestions recommended that demand in October remained largely unchanged, although alternate retail channels could drive future progress divergence throughout corporations.The report highlighted that October's high-frequency indicators — equivalent to e-way payments, petrol consumption, mall footfalls, and PMI readings for manufacturing and providers — remained robust, underscoring total consumption momentum.
Wanting forward, the report expects rural demand to maintain its progress trajectory on the again of rising actual wages, wholesome rabi prospects, and low inflation. City demand, in the meantime, is more likely to agency up by way of the festive quarter, led by discretionary classes like jewellery, the report added.
The report maintained its base case for actual GDP progress at 6.8 per cent in FY26, with an upside potential of 20-30 foundation factors if tariff-related uncertainties ease. Nominal GDP progress is projected at 9 per cent, moderated by subdued worth pressures throughout sectors.
