The Daily Brief The puzzle of why rural India is consuming more
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Sep 19, 2025 Explore the intriguing rise in rural India's consumption, driven by good monsoons but tempered by potential economic fragility. Delve into the latest advancements in AI, including new models and tools, while considering their impacts on jobs and energy demands. Stay updated with bites of economic news, from appeals in energy regulation to corporate acquisitions and Google's infrastructure initiatives in Africa. This varied discussion highlights key trends shaping the economy and tech landscape today.
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Rural Consumption Surge Is Price-Led
- Rural FMCG volumes rose strongly in early 2024 driven by lower prices and better monsoon-linked acreage.
- Rural growth outpaced urban for six quarters, but the boost was price-driven rather than income-driven.
Disinflation, Not Income, Fuels Demand
- Disinflation lifted purchasing power but farm incomes didn’t rise because crop prices and realizations stayed muted.
- The recovery looks fragile since real gains require sustained wage or income growth, not just lower prices.
Balance Sheets Show Strain Beneath Growth
- Household incomes remain stagnant with many reporting no income growth since 2012-era lows.
- Savings have fallen, consumption share rose, and gold loans surged, signalling liquidity stress not prosperity.