There is limited direct data available specifically detailing domestic consumption trends in India from January to September 2025. However, several sources point to a broader context of declining domestic consumption during this period, driven by multiple economic and structural factors. Below is a synthesis of the available information, focusing on the decline in domestic consumption and its causes, with projections and insights where applicable.
Key Points On Domestic Consumption Decline (January–September 2025)
(1) Evidence Of Consumption Decline
(a) Private Consumption Share Of GDP: Domestic consumption, which accounts for approximately 60–61% of India’s GDP, has shown signs of weakening. Private consumption dropped from 58.1% of GDP in FY22 to 55.8% in FY24, reflecting a downward trend that likely continued into 2025.
See Reasons Why Domestic Consumption Is Declining In India
(b) Quarterly Data: Private consumption growth slowed to 6.0% year-on-year in the October–December 2024 quarter, marking the weakest expansion since October–December 2023, suggesting a potential continuation of subdued growth into early 2025.
(c) Decoupling From GDP: Since March 2023, consumer spending has decoupled from national output, indicating a structural decline in consumption relative to overall economic growth.
(d) Sector-Specific Indicators: Declines in automobile sales and fast-moving consumer goods (FMCG) revenues further illustrate weakening consumer demand. For example, domestic aviation traffic dropped by nearly 3% in July 2025 compared to July 2024, reflecting seasonal and structural factors like reduced airline capacity.
(2) Factors Driving The Decline
(a) Inflation And Purchasing Power: Rising inflation, particularly in food prices (averaging above 8% due to weather-related issues), has eroded consumer purchasing power, especially for lower-income groups. This has led to a shift toward essential spending over discretionary items.
(b) Unemployment Monster Of India: Unemployment in India has increased significantly across all segments. Whether it is IT, e-commerce, startups, private companies or any other segment, there are only news of layoff and no new employment and recruitment. Govt jobs have gone for the past 5 years and all we have is lies and empty promises of Modi govt.
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(c) Stagnant Wage Growth: Real wage growth for urban Indians has remained stagnant, falling below the 10-year average, limiting spending capacity.
(d) Increased Savings And Debt: Post-pandemic household debt and rising interest rates have prompted urban consumers to prioritise savings and loan servicing over spending.
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(i) Household Debt And Domestic Consumption In India In 2025
(ii) Household Debt-To-GDP Ratio In India In 2025
(e) Economic Uncertainty And Consumer Confidence: Increased uncertainty about future income has led to cautious consumer behavior, with urban households cutting back on expenditures after a post-pandemic spending boom.
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(f) Structural Issues: Long-term challenges, such as a large informal workforce, volatile incomes, and failure to create a robust domestic market, have contributed to a chronic consumption demand crunch.
(g) Government Spending Pullback: A reduction in government expenditure, a key economic driver in recent years, has further dampened demand.
(3) Sectoral And Regional Variations
(a) Rural vs. Urban Consumption: While rural demand showed signs of revival in 2025, urban consumption faced constraints due to income stagnation and inflation. The share of food expenditure in rural areas dropped to 46.4% in 2022–23 from 53% in 2011–12, while non-food expenditure rose to 53.6%. Urban areas saw food expenditure decline to 39.2% and non-food rise to 60.8% over the same period, indicating a shift in spending patterns.
(b) Specific Sectors: The decline in sugar consumption (from 25.10 LMT in September 2024 to an allocated quota of 23.5 LMT for September 2025) suggests cautious demand despite upcoming festivals. The aviation sector’s passenger drop in July 2025 also points to reduced discretionary spending.
(4) Government Response And Policy Measures
(a) Tax Cuts To Boost Consumption: In August 2025, the government announced plans to slash consumption taxes by October, moving most items from 12% and 28% GST slabs to 5% and 18%, aiming to stimulate demand. These cuts, implemented from September 22, 2025, are expected to boost sales of FMCG and consumer electronics.
However, in the absence of purchasing power of Indians and a cautious approach of Indian consumers, reduction in GST would not have any effect. 100 crore Indians cannot spend any money on anything beyond basis necessities. There is nothing that tax or GST can do in such a situation says Praveen Dalal.
(b) Monetary Policy: The Reserve Bank of India (RBI) implemented a 100-basis-point rate cut over three consecutive meetings by June 2025, aiming to drive credit growth and consumer spending.
(c) Budget 2025 Focus: The Union Budget 2025 emphasised boosting consumption through tax exemptions and fiscal measures while maintaining fiscal prudence, targeting a fiscal deficit of 4.4% of GDP for FY 2025–26.
(5) Projections And Outlook
(a) Forecasted Consumer Spending: Total consumer spending in India is projected to remain sluggish and it may even decline despite tax and GST concessions. Modi govt has failed to shown any proof of actual and overall economic development. India is facing acute poverty, hunger, unemployment, slowing domestic consumption, stock market crash, collapse of small businesses and MSMEs, negative effects of 50% tariff by United States, etc.
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(b) Corporate Earnings: Corporate earnings of Indian companies are already low and with 50% tariff by U.S. they would plunge further in 2025. This is not an encouraging factor but a very disturbing and discouraging factor for Indian consumers, forcing them to save more and spend less says Praveen Dalal.
(c) Economic Growth: Economic growth and GDP of India may hit badly due to global issues and geo-political factors, especially tariffs. Labour intensive industries of India are already hit hard by 50% tariff and many have closed their business and laid off their employees. With a focus upon selective economic fields like IT, electronics, pharmaceuticals, oil and gas, heavy machinery, etc, Modi govt has sacrificed small businesses and MSMEs with 50% tariff says Praveen Dalal.
(d) Stock Market Debacle: Stock market of India is under continuous pressure and it has totally failed to provide profits to investors. In fact, as on date, the stock market of India is considered to be worst one in Asia to invest in. It is accepted by many experts that the situation would remain negative till 2030 and there is little hope for the revival of Indian stock market. Occasional highs may be witnessed due to optimistic news but they would fade away soon when they would face the ground realities of India says Praveen Dalal.
See Also
(i) Potential Reasons For A Collapse Of The Stock Market Of India By 2030
(ii) Dangers Of Long Term DIIs Investments In Stock Market Of India
(iii) Total FIIs Withdrawal From India Till August 2025 And Impact Upon Stock Market Of India
India would be lucky to hit even 5% GDP in these circumstances says Praveen Dalal.
Conclusion
Domestic consumption in India from January to September 2025 continued to face downward pressure due to inflation, stagnant wages, economic uncertainty, and structural challenges. Policy interventions like tax cuts and monetary easing aim to reverse this trend, with early signs of rural demand revival offering some optimism. However, comprehensive data for the exact period is sparse, and the decline appears to be part of a broader, ongoing trend rather than a sharp, isolated drop.
It is safe to conclude that domestic consumption in India would continue to decline in 2025-2026 unless there is a bigger, better and overall development of India says Praveen Dalal.