India’s spending momentum faces a critical test: Why jobs and wages hold the key

Subscribe to enjoy similar stories. MUMBAI : Fiscal and monetary policies cushioned household purses and buoyed sentiment, contributing to stronger consumption during the 2025 festive stretch. But with celebrations behind and policy oxygen expected to thin out in 2026, economists say the baton will need to pass to jobs and wage growth if consumption is to hold its course.

The Centre for Monitoring Indian Economy’s Consumer Pyramids Household Survey (CPHS) showed consumer confidence remained elevated between October through December. The Index of Consumer Sentiments (ICS) rose at an average of around 2% during this period, led by a sharp rural recovery, while urban confidence remains patchy. The quality of sentiment improved as rural households reported better financial conditions in December.

The Index of Current Economic Conditions (ICC) in rural areas increased by nearly 3% in December, following a contraction in November, indicating stronger income perceptions and more favourable conditions for purchasing durables. Goods and services tax (GST) cuts on select appliances and electronics improved the affordability of durables. However, two consecutive healthy cropping cycles, an above-normal monsoon, and higher reservoir levels mainly aided rural sentiments, noted QuantEco Research in its latest report.

Real agricultural wages also grew over 5% year-on-year between April and November in 2025-26, the fastest pace in nearly eight years. This supported a near 20% rise in tractor sales during the same period, while rural passenger vehicle sales expanded almost twice the pace of urban growth in Q3FY26, according to the report. Additional discretionary support came from cash transfers and welfare spending by state governments