Illuminating the Indian Economy

How the Indian Festive season brings prosperity to our home and entire country

The Indian Festive season, which stretches from September to November, is a matter of cultural significance for Indians. Festivals bring about an emotional rejuvenation among the general public. Even if the country undergoes tough times, the same is not reflected in the overall vibe when festivals come around. People religiously associate the festive seasons with a sign of prosperity and a new beginning. Somewhere, this behavioural pattern has been a cornerstone for India’s economic growth since its inception, especially considering that festivals align themselves perfectly with the penultimate quarter of the financial year.

The change in consumer behaviour during the Indian Festive season

There is a very simple economics behind economic growth during the festival season. It all has to do with consumer demand. The net aggregate spending per household increases during the festive season. This is due to the phenomenon of impulsive buying. A study by the Times of India has shown that the time around festivals is when individuals feel happier. Spending more money on activities that make individuals happy, such as shopping for the latest items, is therefore more likely. This impulsive buying is further exacerbated by the bonus culture that exists within labour compensation in India. In 2023, the Central government alone approved Rs. 7000 as a Diwali bonus for all government employees. Moreover, it has been a social trend in India to buy new items for their household to celebrate the auspicious occasion of Dussehra and Diwali. According to a survey by Localcircles, 1 out of 3 households likely spent more than 10000 INR during the festive season last year, despite the economic stress post-pandemic. Another online survey titled “Titled ‘Festive Season Pulse 2021” conducted by Adtech firm The Trade Desk and YouGov revealed that this festive season, 91 per cent of Indian consumers are planning a purchase during the upcoming festival season. Moreover, consumers not only buy for themselves but also for their close ones because of the gifting culture surrounding these festivals. The sudden change in consumer behaviour pushes firms to boost the quantity and quality of products sold to them.

How Different Sectors are Impacted?

The cultural and religious significance of the festive season is one of the main reasons for the augmentation of market expenditure during this period. Confederation of All India Traders (Cait) predicts that consumer expenditure will touch 3 trillion rupees this year, compared to 2.5 trillion, last year. Some of the sector-wise biggest gainers are Automobiles, Gold, and FMCG.

1. Automobile- As per the report published by FEDERATION OF AUTOMOBILE DEALERS’ ASSOCIATIONS the festive season of 2022 was the best one in four years. During the festive season, the year-over-year growth was 28%, All categories were in the green with 2Wheelers, 3Wheelers, Personal Vehicles, Tractors, and Commercial Vehicles growing by 26%, 66%, 28%, 33%, & 28% respectively. The PV segment witnessed the best festive season in a decade outperforming 2020’s festive sales by 2%.
2. Gold- The global demand for the yellow metal fell by 6% during the Q3 of 2023 yet the festive season in India acted as an economic catalyst and India showed a double-digit growth of 10% and purchased 210 tonnes in the 3rd quarter of 2023 compared to 192 tonnes of the previous year 2022
3. FMCG- Sales for this sector have shown a 28% YoY growth, especially for sweets, electronics, and luxury items. Online retailers are gearing up for the festive season with the prediction of around 20% sales growth compared to last year and breaching the threshold of Rs. 90,000 Crores.

How do Indian brands capitalise on consumer demand surge?

Everyone knows Flipkart’s big billion days and Amazon’s great Indian festival. Brands incorporate different marketing strategies to incentivize customers into spending more through their personalised marketing narratives resonating with the feeling of optimism and goodness that festivals bring about. The classic example of this is the “Not just a Cadbury Ad” campaign by Cadbury India which uses effective storytelling to align its brand value to promote itself under the purview of small businesses. Furthermore, the concept of “Diwali offer” has existed for decades to monetize the price-sensitive markets of India. Moreover, brands create specialised gift hampers for corporate giftings not only paving a new revenue model but also providing them with an indirect promotion strategy.

The Rise of the Gig Economy

In anticipation of an upsurge in demands, companies from prominent sectors like E-commerce, FMCG, manufacturing, etc. would look forward to filling in their human resources requirements for the short term in various operational and retail work. Therefore, companies hire gig workers on a contract basis. According to various articles citing TeamLease report, over 400,000 gig and temporary workers were hired to serve the high festive demand in 2022 as India celebrated Diwali. This number could go as high as 700,000. Awign has projected a 25% quarter-on-quarter growth projection considering consumer demand in the festive period. This is not only a huge cost-saving opportunity for the company but also generates a large amount of seasonal employment, contributing to the average income of the entire economy.

Conclusion
India is called the Land of Festivals and truly so, considering that festivals not only give individuals a new sense of spirit but also provide new hopes for economic growth. As is evidently proved that the socio-cultural environment of India acts as an Economic catalyst for the various sectors which experience a sudden boom during the festive season followed by a period of slight downturn in sales. This clearly goes on to show how important the festive season is to the demographic of the Indian subcontinent.

References

• https://www.livemint.com/companies/news/early-festive-cheer-world-cup-effect-lift-consumption-11697482319402.html

• https://www.businessinsider.in/business/news/global-gold-demand-plunges-india-bucks-trend-with-double-digit-growth/articleshow/104847711.cms

• https://www.financialexpress.com/business/industry-retailers-eyeing-10-12-growth-in-sales-during-festive-season-this-year-employment-to-increase-by-20-3269142/

• https://www.thehindu.com/business/indias-q3-gold-demand-up-10-at-2102-tons-price-to-play-key-role-in-dhanteras-buying/article67479667.ece

• https://brandequity.economictimes.indiatimes.com/news/marketing/nu-republic-onboards-farhan-akhta

• https://www.moneycontrol.com/news/business/companies/festival-season-cheer-packaged-food-and-beverage-companies-witness-surge-in-sales-9311381.html

• https://timesofindia.indiatimes.com/blogs/voices/how-consumer-behavior-changes-during-the-festive-period/

• https://www.news18.com/business/festive-season-jobs-india-freshers-hiring-gig-workers-8583366.html

• https://www.localcircles.com/a/press/page/india-consumer-spending-survey-2022

• https://www.business-standard.com/article/current-affairs/high-festive-demand-pushes-up-demand-for-gig-and-temp-workers-report-122102600309_1.html

• https://www.financialexpress.com/business/industry-awign-gears-up-to-onboard-60000-gig-workforce-on-25-surge-in-demand-during-festive-season-3244487/