Rural India’s reality check: Consumers turn cautious as aspiration meets inflation

New Delhi: For years, marketers have relied on the narrative of “aspirational Bharat” to fuel rural campaigns—one that framed India’s villages as digitally connected, upwardly mobile and brand-hungry. However, new data from Kantar’s Rural Barometer 2025 and insights from media agency GroupM suggest that rural India is entering a more cautious phase.

Rising expenses, flat incomes and inflationary pressure are making consumers more selective, even as aspiration continues to simmer beneath the surface.

“Expenditure in rural India has grown faster than incomes. For every additional rupee earned, households are spending ₹1.50,” said Puneet Awasthi, director–customer strategy and insights, South Asia, at Kantar. “That imbalance is creating stress, especially among younger and affluent households—the very segment marketers have long viewed as growth engines.”

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The study, based on a February 2025 survey of over 4,000 respondents across 20 states, found that 77% of rural consumers are concerned about their personal financial situation. 

Interestingly, the stress is more visible in states like Andhra Pradesh, Telangana, Punjab and Haryana—traditionally considered more prosperous rural markets. 

“The lower end of the pyramid has its basic needs covered, thanks to government interventions. But it’s the more aspirational, affluent segments that are feeling the squeeze now,” Awasthi said.

Reordering priorities

The data also shows a clear reordering of spending priorities. Big-ticket purchases such as smartphones, appliances and vehicles are being deferred. Instead, rural households are focusing on family ceremonies and everyday essentials. “There’s been a visible uptick in spending on weddings and social events,” Awasthi noted. “These are emotionally important moments, and consumers are willing to stretch for them, even in tough times.” 

Personal care and household cleaning categories are seeing steady growth as well, with the uptick spanning both traditional items like soaps and sachets, as well as beauty and cosmetic products.

India's rural markets drive sales for categories such as tractors, small kitchen appliances, fans, small packs of shampoos, soaps, colas and home cleaning products. These markets are also reliant on a good monsoon that helps drive better prices for famers.

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“Inflation bites everyone and typically what we see is—unless it's a capital good—rural consumers normally tend to avoid large purchases. Urban consumers are relatively liberal when it comes to taking a loan; however, rural consumers are scared of taking debt. So when it comes to spending during inflationary periods they will spend more on essentials," said Mayank Shah, VP, at biscuit maker Parle Products. 

In the last 2-3 years Parle Products has ramped up distribution of its small packs of biscuits in rural markets to aid affordability. The company, however, has seen rural growth outpace Urban demand over the last six to eight months.

Awasthi said a tamed inflationary environment coupled with the government's support to provide basics such as free ration and LPG could provide an upside to rural consumption over the next 6-12 months. “This will also help drive category adoption."

Easing retail inflation

India's retail inflation eased in March to its slowest pace in over six years (since August 2019) on the back of lower food prices, showed provisional government data released on Tuesday. 

Also on Tuesday, the India Meteorological Department (IMD) forecast above-normal rains during the coming monsoon season in the country.

Citing historical data, analysts at ratings firm Crisil said that a slightly above-normal monsoon has a positive impact on agricultural productivity, benefiting both hkarif and rabi seasons by replenishing reservoirs. 

However, an excess of 110% of the long period average rain can have a detrimental effect on kharif crop yields, despite its potential benefits for the subsequent rabi season. 

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"The IMD's second forecast in late May will provide further clarity on the monsoon's trajectory, and its implications for India's agricultural sector. Further, given ease of export restrictions for rice where India was the largest exporter of the commodity pre-pandemic and improvement in demand for maize from the ethanol sector, we expect prices for such commodities to be supportive. All these factors will aid rural consumption and we can see better prospects for FMCG, consumer durable and two-wheeler segments,” said Pushan Sharma, director, research, Crisil Intelligence.

Meanwhile, borrowing patterns have shifted. Loans for personal expenses have risen, while education and business-related borrowing has declined. “People are taking credit just to sustain their lifestyle—this is a sign of financial vulnerability,” he added.

Digital continues to grow, but the winners are changing. Meesho and Myntra are gaining rural traction, while Flipkart and Amazon are losing share. “Rural audiences are becoming more value-conscious, more platform-agnostic,” said Ajay Mehta, Senior Vice President at GroupM. “The platforms that can tailor offerings to local needs—and speak without condescension—will win.”

Online shopping penetration in rural India remains modest at around 20%, but the direction of change is clear. “The infrastructure is ready. What’s needed now is frequency and relevance,” Mehta said. Local shops, however, remain the go-to channel for daily needs like groceries and household items.

Niche in markets

OTT platforms, despite high smartphone usage, remain niche in these markets. Short-form content continues to dominate rural screen time, driven by attention spans and content relevance.

“You can’t just transplant urban OTT models into these markets,” Mehta said. Awasthi clarified that while digital platforms like YouTube, Facebook and WhatsApp may appear to be losing traction, their usage has actually grown in absolute terms. “The ecosystem has fragmented. People are now using multiple platforms, and that’s natural in a maturing digital market,” he said.

Trust, however, still rests with traditional media. “TV and newspapers remain the most credible sources, especially for older and higher-income rural audiences,” Awasthi said. “Even as digital grows, there’s a belief-gap that needs to be addressed.”

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Government welfare schemes continue to play a stabilizing role. Schemes like PM Garib Kalyan Yojana’s free ration distribution are freeing up cash for other purchases. “These interventions are allowing even lower-income households to participate in broader consumption,” Awasthi said. “If they were withdrawn, it would create significant disruption.”

So where does that leave marketers? Both Awasthi and Mehta agree that rural India is still aspirational—but it’s an aspiration tempered by caution, shaped by inflation, and guided by value. “It’s not about slowdown—it’s about recalibration,” Mehta said. “Rural consumers haven’t stopped spending. They’re just choosing more carefully. And that means it’s time for marketers to evolve their playbook.”