The index of consumer sentiments scaled up cumulatively by 9% in the month till September 12, driven by the middle income households in rural India and is likely to translate into enhanced consumer spending, the Centre for Monitoring Indian Economy said.

Data by CMIE shows that while the overall index of consumer sentiments grew by 5.3% in the week ended September 12, the index for rural India grew by 9%. Similarly, in the preceding week that ended on September 5, while the overall index of consumer sentiments increased by 3.9% the index for rural India grew by 4.9%.

Even in August, while the all-India consumer sentiment had increased by a modest 1.7%, the rural index of consumer sentiments had increased by 4% in the month while the index for urban India had declined by 2% in the same month.

Consumer sentiments in urban India, on the contrary, have been subdued. Cumulatively in the first two weeks of September while the rural index of consumer sentiments rose by 14.3%, the index for urban India rose by only 1%. In the week ended September 12, it fell 1% while in August it had fallen by 2%.

“Buoyant consumer sentiments are important for the festive season to translate into enthusiastic consumer spending,” CMIE said in its weekly labour market analysis. “It is important that consumer sentiments are, in fact, cultivated to motivate households who have the spending power to spend during this festive season,” it added.

According to CMIE, consumer sentiment of rural households with annual income between Rs 200,000 and Rs 500,000 had shot up by 12.5% in August. There are an estimated 69 million such households out of the total 215 million households in rural India.

“This is the fat middle income group of rural India. If consumer sentiments of nearly one-third of rural India spurt on the eve of the festive season then there are implications on the growth of consumer markets in rural India in the coming few months,” CMIE said.

Further, the non-salaried segment in rural India which constitutes over 50 million households are quite optimistic, CMIE said. Among these, the businessmen and farmers reported an over 5% increase in consumer sentiments in August followed by 23 million salaried households in rural India which witnessed a 16.1% jump in consumer sentiment index in August.