While the Middle East conflict and global headwinds create noise, the data indicates that the Indian consumption story is entering this period on a much stronger footing than many realize.
Here is why we believe consumption will remain stable despite current geopolitical challenges:
Policy Response
The government is actively using its fiscal headroom to limit the impact of global shocks on the household.
- Income Buffers: A combination of GST cuts, tax rebates, and interest rate pauses is expected to provide a boost to disposable income for individuals in the INR 0.5–1.2mn income bracket.
- Fuel Subsidies: To prevent an “inflation shock,” the government has already cut excise duties on petrol and diesel by INR 10/lt, absorbing a significant portion of the crude price spike.
- LPG Support: Subsidies continue to protect 333 million households, with 84% of urban and 48% of rural households relying on LPG, ensuring that energy price pass-through remains limited.
Gold Wealth Effect
A major differentiator for the Indian household is the Gold Wealth Effect.
- Asset Value: With 25,000 tonnes of gold held domestically, the unrealized value of these holdings is now 2.43x the total household debt (as of Sept 2025).
This provides a liquidity buffer that households can tap into during shocks.
Job Market
- Non-IT Resilience: While IT services have slowed, non-IT sector openings are compensating, with Naukri Jobspeak Index data showing that total job openings bottomed out in CY24 and are now gradually improving.
- Wage Hikes: The Eighth Pay Commission is expected to benefit nearly 8.4 million employees and pensioners.
- Corporate Spending: Salaries and wages spend by corporate India have shown a steady rise, growing by over 8% YoY as of late 2025.
Rural economy and Agricultural Strength
Despite El Niño risks, the rural economy has several layers of protection.
- Bumper Crops: The Rabi crop output is estimated to be 3.2% higher than last year, with ground realizations performing better than the previous Kharif season.
- Monsoon Buffer: Two consecutive years of surplus monsoon (FY25 and FY26) to help blunt the potential impact of weather disruptions, keeping rural demand conditions supported.
The “policy cushion” and household balance sheet resilience we see today suggest that the impact of war will be softer than anticipated for the consumer.
If you want to stay invested in India’s resilient growth story despite global noise, the right strategy matters now more than ever.
Let’s help you position your portfolio to capture these opportunities – start investing with us today.
