As monsoons ended with a 13 per cent deficit in overall rainfall, it could weigh on rural income and consumption in the coming months with a lag effect. FMCG Players and analysts said that while rural demand in Q2 has been steady, the impact of below normal monsoon may lead to cautious rural spending on discretionary categories especially post festival.
Analysts also pointed out that rural demand is expected to be uneven due to regional disparities in rainfall shortfalls. This comes at a time when inflationary pressures due to impact of the West Asia crisis have already been a key concern.
Ajay Thakur, Research Analyst, Anand Rathi Institutional Equities, said, “Our ground checks suggest that companies have witnessed steady rural demand in Q2 in staples and essential products. However some softness has been witnessed for discretionary categories in rural regions. Overall the impact on rural demand due to monsoon deficiency is expected to be more clear and visible in the coming months.”
India may get normal rain during Oct-Dec as S-W monsoon ends with 14th lowest rainfall in 125 years
Mayank Shah, Chief Marketing Officer, Parle Products Pvt Ltd, said, “Demand trends during Q2FY27 have been strong and we expect to see continued momentum during the festival months in both rural and urban regions. As far as food and essentials categories are concerned, we do not anticipate any impact due to the deficient rainfall. The impact is expected to be seen in the discretionary segment.”
A weak monsoon has a direct impact on agri productivity and lower farm input often translates into reduced household incomes. Nearly 313 districts experienced deficient or large-deficient rainfall.
Chirag Jain, Partner and Agriculture and Allied Sector Leader, Grant Thornton Bharat, said, “Looking ahead, rural demand is expected to remain uneven across regions. Southern, and, Eastern, and other rainfed districts that experienced significant rainfall deficits may witness weaker consumption growth during the next three to six months. However, the ultimate trajectory will depend on the performance of the upcoming rabi season.”
He noted that impact on rural demand generally emerges through a moderation in discretionary spending as rural households tend to prioritize essential consumption such as food, healthcare, and education.
“The near-term environment points towards cautious consumer spending, especially on discretionary items, while essential consumption is expected to remain stable. A strong rabi crop could significantly improve rural income prospects and support a recovery in demand during the second half of the fiscal year,” he added.
Stating that rural demand will need to be monitored closely over the coming months, Jyotiroop Barua, Business Head, Confectionery, DS Group, added that affordability and accessibility will remain important drivers of consumption, particularly if rural consumers become more value conscious.
Published on October 2, 2026
