Economy
Are people spending, in cities and villages alike?
Spending more than their mood suggests. Household consumption grew 7.1% in Q1 FY27, yet RBI's urban confidence index, at 87.9, says more households feel worse off than better off than a year ago. Villages sound slightly less gloomy than cities.
Written for anyone who wants to know whether Indian households are spending, and how they feel about it. Survey to September 2026.
Spending more than their mood suggests.
Households are still spending. Their consumption, as the national accounts measure it, grew 7.1% in Q1 FY27 on a year earlier after allowing for prices, and 7.3% on average over the last four quarters, a little faster than the 6.9% it averaged in the years before the pandemic. Over the six months to September 2026, registrations of two-wheelers grew 21.3% on a year earlier and of cars 25.6%. Banks' loans to individuals are up 16.9%.
Ask them how things are, though, and most say worse. RBI's urban consumer confidence index stood at 87.9 in September 2026; below 100 means more households say the economy, jobs, prices, income and spending are worse than a year ago than say better. That reading is lower than in 84% of survey rounds since 2012, leaving out the lockdowns. On jobs the net response was −21.6, on the economy −29.3, and on prices −94.6: nearly everyone says prices have risen. They are more hopeful about the year ahead (the future expectations index is 113.5), as in 95% of rounds since 2012.
Villages sound a little less gloomy than cities. RBI's rural survey, which its workbook carries from September 2023, put rural confidence at 90.6 in September 2026, down from 100.9 a year earlier, above the urban reading in all 19 rounds so far, by 3.0 points on average. Two-wheelers, bought mostly outside the big cities, grew 21.3% on average over the six months to September 2026, slower than cars (25.6%), and tractors 20.4%. Between 2022-23 and 2023-24, the two years of MoSPI's consumption survey, spending per person rose 10.0% in villages and 8.5% in towns and cities, before allowing for prices.
Two readings stand out on the weak side. UPI payments to merchants grew 23.3% in September 2026, fast by most standards but lower than in 95% of months since April 2022, as a maturing system slows. Domestic air passengers were 6.3% fewer than a year earlier in August 2026, lower than in 96% of months since 2010. And the fastest-growing kind of household borrowing is the loan against gold jewellery, up 83% in a year.
Scorecard
Eight readings, each against its own history. Monthly growth rates leave out April 2020 to March 2022, when the lockdowns and their base effects swung every series; the rural survey and UPI's merchant split have short histories.
usual range: the middle half of all readings latest 100: neutral Each line runs from the lowest reading to the highest.
This month
87.9urban confidence, September 2026
Urban confidence slipped from 88.3 in July 2026; rural from 91.7 to 90.6. Registrations in September 2026: two-wheelers 33.6% and cars 35.2% up on a year earlier.
This cycle
7.3%household consumption growth, last four quarters
Up from 6.6% in the four quarters before. Since the lockdowns, urban confidence has peaked at 98.5 (March 2024), never back above 100; its median since 2012 is 95.7.
This decade
6.9%a year, before the pandemic
Household consumption's average growth from 2012 to 2019, on the old base. Urban households spend 1.67 times as much per person as rural ones, down from 1.69 a year earlier; food is 48.4% of rural spending and 40.3% of urban.
What households say
Every question, urban and rural
RBI asks households in 19 cities, and since September 2023 in villages too, whether the economy, jobs, prices, their income and their spending are better or worse than a year ago, and what they expect a year on. The current situation index sums up the first answer; the future expectations index the second.
Consumer confidence, urban and rural
RBI's indices, each survey round. Above 100, more households say better than worse.
How to read it. The two 'now' lines are the ones to read: households are nearly always hopeful about next year, so the 'ahead' lines sit high and say little on their own.
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Does mood predict spending?
We wrote a test down before running it: does the change in urban confidence over a year improve on last quarter's consumption figure as a guide to this quarter's? It does not. Over 23 quarters forecast out of sample, adding confidence made the forecast 1.8% worse (p 0.71). Even in hindsight the change in confidence barely moves with consumption growth (rank correlation 0.14).
Household consumption growth and two forecasts
Real growth on a year earlier, and each quarter's forecast made with earlier quarters only. Lockdown quarters left out.
How to read it. If confidence carried news, the 'with confidence' line would hug the outcome more closely than last quarter's figure does. It does not.
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Cities and villages
No monthly series splits spending into rural and urban, so vehicles stand in: two-wheelers and tractors sell mostly outside the big cities, cars mostly in them. In the twelve months to September 2026, two-wheelers grew faster than cars in five of them.
Vehicle registrations, growth on a year earlier
Monthly registrations on the Vahan dashboard, against the same month a year earlier, from April 2023.
How to read it. Festivals move between months (Diwali fell in October in some years and November in others), so single months jump; read the run of several.
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How they pay
UPI payments to merchants are the closest thing to a daily till receipt for the country. They grew 23.3% in September 2026; credit card spending grew 7.4% in July 2026. Both are growing more slowly than in most months since April 2022, as more of what households buy already goes through them.
Payments, growth on a year earlier
Value of payments in the month against the same month a year earlier, from April 2022.
How to read it. Growth in payments mixes more spending with a shift from cash, so it runs ahead of consumption; watch its direction, not its level.
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What they borrow
Banks' loans to individuals grew 16.9% in the year to August 2026. Housing is 47% of the total; the fastest-growing part is loans against gold jewellery, up 83%. Meanwhile 25.2% of the EMIs, premiums and other debits presented through NACH in September 2026 came back unpaid, against a median of 24.6% since 2013, lockdown months left out.
Bank loans to individuals, growth on a year earlier
RBI's sectoral deployment of bank credit. Housing is left blank for the year after HDFC's merger (July 2023 to June 2024).
How to read it. Gold loans swing with the gold price, since the same jewellery supports a bigger loan. Gaps are months for which RBI's workbooks, as held, print no growth.
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The household's bill
The Department of Consumer Affairs reports retail prices of essentials across India every day. On 24 October 2026, 35 of the 39 it quotes with a year-ago price cost more than a year earlier and 3 cost less; the median change was 4.2%. Onion led, up 99%.
Retail prices of essentials, 24 October 2026, against a year earlier
All-India average retail price, 39 items, against the same date a year earlier.
How to read it. One day's prices, not an index: vegetables swing by the week. For the trend, the CPI's food pages are the guide.
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Air travel: we began capturing the civil aviation ministry's daily passenger count on 23 October 2026. It will be charted once a few weeks have built up; until then DGCA's monthly figure, on the Payments page, is the guide.
What the numbers can't tell you
- What people say is not what they spend
- The confidence surveys ask whether things are better or worse, not by how much. Our pre-registered test found that urban confidence adds nothing to last quarter's consumption figure as a guide to this quarter's, so read the surveys for mood, not as a forecast. More.
- Villages rest on a short series
- RBI's urban survey covers 19 large cities from 2012. Its rural survey appears in RBI's workbook only from 2023, too short a history to say what is usual. Vehicles stand in for rural demand, imperfectly: they count vehicles registered, not buyers or what they paid.
- Consumption is measured slowly and indirectly
- The national accounts estimate household consumption partly as what is left over after other spending, and revise it. The household consumption survey measures it directly but only for two recent years on the current design, so it cannot show a trend. More.
- Payments are not purchases
- UPI and card values grow as people move from cash, not only as they spend more. A bounced NACH debit can mean an empty account, a closed one or a technical error; the rate shows stress only when it moves.
- Averages hide the bottom
- Every figure here is an average or a total. A household near the bottom can be squeezed while totals grow, and none of these series follows the same households over time.
What changed
Survey round of September 2026 against July 2026; monthly flows against the month before.
| Measure | Previous | Now | Change |
|---|---|---|---|
| Urban confidence (index) | 88.3 | 87.9 | down 0.3 points |
| Rural confidence (index) | 91.7 | 90.6 | down 1.1 points |
| Urban view of jobs (net) | −21.9 | −21.6 | up 0.3 points |
| Urban view of income (net) | +1.9 | +3.9 | up 2.0 points |
| UPI to merchants (September 2026) | 23.7% | 23.3% | down 0.4 points |
| Two-wheelers (September 2026) | 20.6% | 33.6% | up 13.0 points |
| Loans to individuals (August 2026) | 16.2% | 16.9% | up 0.7 points |
| Debits bouncing (September 2026) | 24.9% | 25.2% | up 0.3 points |
The workings
The question
Data
Every chart has a table view, a CSV download and a link to its published JSON. Bundles are listed in data status.