Discretionary spending intent falls from 58% in 2024 to 55% in 2026: Report

Consumer sentiment ahead of the 2026 Union Budget reflects caution and measured expectations, according to Kantar’s fifth annual India Union Budget Survey released ahead of the Budget presentation on February 1.

The report noted satisfaction with the 2025 Union Budget, largely due to tax reforms. The survey indicated growing concerns around economic slowdown, income stability and future preparedness.

Inflation, job security and global uncertainties are influencing household decision-making, leading to restrained spending and a greater focus on financial security over discretionary consumption.

Optimism around long-term economic goals, including India’s $5 trillion economy target, has moderated, along with expectations from the startup ecosystem, the survey noted.

The report also highlighted India’s transition toward a cashless digital economy and increasing use of AI, alongside rising calls for stronger regulation, upskilling initiatives and clearer policy direction.

Spending intent weakens amid uncertainty

The belief that India will achieve its $5 trillion economy milestone has shifted from 2027-28 to 2028-29.

About 51% of respondents said global geopolitical conflicts pose a threat to economic growth and stability.

Views on U.S. tariffs were mixed, with 58% saying they were either confused or pessimistic about their impact. Business owners and self-employed respondents expressed higher concern, while salaried consumers were relatively more optimistic about export diversification.

The survey showed a decline in discretionary spending intent. The share of consumers planning to spend on dining out, shopping, entertainment and subscriptions fell to 55% in 2026 from 58% in 2024.

Interest in high-ticket purchases such as travel, vehicles, property and luxury goods declined to 46%, compared with 51% two years earlier.

Confidence in India’s startup ecosystem also softened, with expectations of improved performance falling to 67% from 73% in 2024. Market sentiment reflected similar caution, with 63% of consumers expecting the BSE Sensex to trade between 86,000 and 95,000 in 2026.

AI adoption rises amid concerns

According to the survey, 79% of consumers now use AI multiple times a week, indicating that it has become part of everyday life. A majority, 54%, believe AI will support upskilling, new skill development and workplace efficiency, with E-commerce, Education and Cyber Security seen as the biggest beneficiaries.

However, nearly one in five consumers, or 18%, expressed worry about potential job losses or role reductions due to AI. More than half, 54%, cited AI misuse and AI-led financial fraud as growing risks.

The survey found that 53% of consumers want faster regulatory approvals and tax incentives for early-stage AI startups.

Digital payment adoption has also increased, rising from 53% in 2024 to 67% currently, driven largely by salaried consumers.

Awareness gaps in reforms and sustainability

The survey recorded that awareness of the New Labour Code reforms stands at 51%, with eight in ten informed consumers expecting a positive impact. In contrast, awareness of the Digital Personal Data Protection Rules 2025 remains limited.

On sustainability, 58% of consumers said they plan to adopt electric vehicles. However, concerns around charging infrastructure and battery safety continue to limit wider adoption.

Tax relief boosts sentiment, but concerns remain

The survey found that 70% Indians said the 2025 Union Budget met their expectations, largely due to tax reliefs. While in previous years, the sentiment declined from 73% in 2023 to 67% in 2025’s survey.

Despite this, demand for further tax reforms remains steady, particularly among middle-class households. Key expectations include increasing the standard deduction from Rs 75,000 to Rs 1 lakh and enhanced Section 80 deductions and rebates on medical and health insurance.

Inflation remains a key concern, with 60% of respondents citing it as a worry in 2026, up from 57% in 2024.

Over 36% Indians also identified job layoffs as a major concern.

Commenting on the findings, Deepender Rana, Executive Managing Director- South Asia, Kantar, said, “Over the past few years, the consumer sentiment has shifted from optimism to a more pragmatic outlook. Concerns around inflation and job security persist, now compounded by global uncertainties and geopolitical tensions. While tax relief has lifted sentiment, households are increasingly focused on income stability and future preparedness. There is a clear expectation for the government to engage more closely with the middle class and taxpayers through targeted reforms, stronger economic safeguards and transparent communication. Policies that support upskilling, responsible AI adoption and digital trust will be critical to sustain confidence in India’s growth story.”