High prices and slow income growth have taken the bang out of Diwali this year.
A survey conducted by Hindustan Times and research agency Hansa found that Diwali celebrations are more subdued than last year — think tiny phooljhadis instead of booming rockets.
Nearly half of those surveyed (47%) said their employers did not give any bonus this year. Of those who did get bonuses, nearly one in four said they were lower than expected. More than 28,000 respondents within 18 to 45 years were surveyed in 13 cities.
“I usually splurge during Diwali. But with a low bonus and price rise, we have decided to cut down, especially on gifts,” says Anirudh Bhaskar, a Delhi-based marketing executive.
Companies, meanwhile, are cutting corners to stay afloat, leading to fewer jobs and lower salary hikes. This, coupled with high prices, has hurt spending.
According to the Reserve Bank of India’s latest macroeconomic and monetary development report, growth in corporate sales fell to a 10-quarter low of 13% in the first quarter and continues to remain weak even in the second quarter.
Almost all everyday products and services — food to movie tickets to medicines — have turned dearer in the past 12 months. Medical care, education and other such services also cost more now.
About 60% of those surveyed said they will spend less than last year, while 56% said they had put off buying something extravagant.
“Most consumers are postponing their purchases. We anticipated that the festival season will provide some growth but it has not happened so far,” said LK Gupta, vice-president and chief marketing officer, LG India."This time, crackers are 30%-70% more expensive," said Ravikumar, a dealer who puts up a stall in Chennai every year.
Besides, in the past three years, home loan EMIs have steadily gone up. “I had taken a loan of R54 lakh in 2006 to buy a house in Noida at an EMI of R48,000. Now it has reached R64,000,” said Sudhir Verma, a marketing consultant.
Wholesale price index -based inflation was 7.81% in September, up from 7.55% in August. Experts expect prices to rise further."My wife and I planned to buy a new car around Diwali, but neither of us got a bonus and the raise was low, so we didn’t," said Anuj Anand, a Mumbai resident, who works in a multinational petroleum company.
India’s economy grew 5.5% during April to June, marginally higher than 5.3% recorded during the previous three months, but full-year growth for 2012-13 may be below 6%, mirroring the sharp slowdown in an economy that, until recently, was an engine for global growth.
The survey was conducted in Delhi, Mumbai, Kolkata, Chennai, Hyderabad, Bengaluru, Pune, Ludhiana, Lucknow, Patna, Kochi, Jaipur and Ahmedabad.
With inputs from Sachin Dave and KV Lakshmana