Indians spend a lot over the holiday season, which boosts the economy

 Indians spend a lot over the holiday season, which boosts the economy

India's holiday spending is surging as people splash out on cars, cellphones, and TVs, boosting one of the world's economies that is growing the quickest.  

During the first week of the holiday holidays, sales at online retailers like Flipkart, owned by Walmart Inc., and Amazon.com Inc. increased by over 5% compared to the same period last year. October saw a 40 percent increase in digital transactions over the same month last year, according to Unified Payments Interface data.

Before the Hindu holy celebration of Diwali, which falls on November 12 this year, India celebrates for a few weeks. During this time, millions of Indians often overindulge in food, presents, and house renovations. Sales, which account for almost 60% of India's GDP, are a crucial barometer of the state of consumption.

The bulk of people in India reside in rural areas, where economists predict that salaries would rise and inflation will moderate. According to the most recent data from the central bank, consumer confidence hit a four-year high in September. Meanwhile, despite this year's interest rate rises, demand for bank loans is almost at a 12-year high.  

Ahead of the elections, the administration of Prime Minister Narendra Modi is also focusing on farmers, offering them lower cooking gas prices and higher guaranteed prices on particular crops.

According to a survey released this week by Quanteco Research economists Vivek Kumar as well as Yuvika Singhal, "both urban and rural consumers are entering the festive season on a much healthier footing." According to them, the ongoing financial assistance given to rural communities before of elections may increase sector consumption even more. 

The third-largest economy in Asia is seeing stronger industrial activity thanks to increased expenditure, which is also supporting growth of over 6% in the current fiscal year, which ends in March. The International Monetary Fund expects India’s GDP would rise 6.3 percent in both 2023 and 2024 – the quickest rate among major nations. 

While banks like Axis Bank Ltd. are counting on an improvement in economic activity in the coming months, consumer firms are reporting improved sales. In a statement released last week, Reliance Retail claimed to have seen "strong shopping" throughout the previous festivals.

The Cricket World Cup and the approaching wedding season are anticipated to enhance consumption in addition to the holiday season. 

Up to November 19, the cricket tournament is being held in locations all throughout India. According to some experts, the money that spectators spend on travel and dining out might boost the economy by $2.6 billion. The biggest trade association in the nation, the Confederation of All India Traders, projects that $50 billion would be spent on consumer products, apparel, and gold jewelry during the wedding season, which spans from November 23 to December 15. 

Following the holiday season is anticipated to be a busy wedding season, which together should sustain near-term growth, according to Teresa John, an economist with Nirmal Bang Institutional Equities Pvt. "A slow recuperation in discretionary spending, particularly in the mass market, should also be aided by the easy availability of credit as well as projections of cooling inflation."

According to a survey by consultancy company RedSeer, online sales from Amazon, Flipkart, and other retailers surpassed 47 billion rupees ($565 million) in the week ending October 15. Approximately 67% of the sales were driven by major appliances, technological products, and mobile phones.  

over October 1 to October 30, transactions totaling 16.46 trillion rupees were handled via UPI, a real-time digital payment system. This represents an increase of more than 40% over the same period last year. According to Reserve Bank of India statistics, credit card payments surged 16 percent to 1.42 trillion rupees in September.

A similar picture of robust consumption is painted by other high frequency indicators:

September saw 1.6 trillion rupees in revenue from goods and services tax, an increase of 10% over the same month last year.

Peak power consumption, a crucial indicator of activity in the manufacturing and industrial sectors, surpassed official projections in September, reaching a record high of 240 gigawatts.

Additionally, factory floors are humming as manufacturers expand their capacity to meet the robust demand.

One of the biggest contract manufacturers in the nation, Dixon Technologies Ltd., has mobile phones, LED TVs, and washing machines as its top three verticals for orders. Earlier this month, Saurabh Gupta, the company's chief financial officer, said as much. To satisfy its order stream, Dixon implemented multiple shifts in most of its 20 facilities.