NEW DELHI: Despite inflation and global recession, India's festive trade has boomed. During the festive season which started in late September, Indian consumers are buying vehicles, jewellery, houses and home appliances etc.
Online and offline sales during the Hindu festival period, which began in the last week of last month and lasts until early November, are estimated to exceed $27 billion.
That's nearly double the amount in 2019, the pre-Covid period, and about 25% higher than last year, according to industry figures.
The sales would include nearly $15.2 billion in offline sales, compared to about $8.5 billion in 2019, according to the Confederation of All India Traders (CAIT). This year there will also be $11.8 billion worth of sales on online platforms like Amazon and Walmart's Flipkart, according to Redseer, a market consultancy.
Retail sales always peak during October-November, when the nation of 1.4 billion celebrates the major festivals of Dussehra and Diwali. It's also an auspicious time of year to get married, according to Hindu belief.
But the surge this year is much larger, mainly due to pent-up demand as COVID-19 recedes after two years of devastating the country, as well as a rise in wages and an increase in jobs as the economy recovers, said industry leaders.
"After two years of pandemic fatigue, Indian consumers are upbeat ahead of the festivals," said Sanjay Kothari, associate partner at Redseer, adding online sales rose by nearly one-fifth in the first week of the season compared to last year.
The number of online shoppers has quadrupled to 200 million since 2018. Demand for items like mobile handsets and fashion apparel has spread to smaller towns. Therefore, such sales are likely to remain strong for at least the next three months.
According to the Federation of Automobile Dealers Association, vehicle sales in 2019 were up nearly one-fifth compared to the pre-pandemic period.
In the country's top seven cities, home sales in the September quarter rose nearly 70% from a year earlier, said a report by the JLL consultancy, as builders offered festival discounts.
The boom in India comes despite economic challenges elsewhere in the world, with widening inflation in the aftermath of the Russia-Ukraine war and sharply higher interest rates.
Countries representing one-third of global output are expected to be in recession next year, the IMF has said.
In India too, lending rates have gone up by about 150 basis points since May as the central bank acted to combat consumer inflation which hit a five-month high of 7.41% year-on-year in September. read more
But economists said the sense in India was that inflation has peaked while economic activity was picking up. The bump in consumer demand is expected to support the economic growth of around 6.5% in the fiscal year ending March 2023, the highest among the world's major economies.
Retailers ported a huge pick-up in demand, particularly in urban areas. Rural demand, however, remained weak due to lower wage growth compared to the cities, traders said, and possibly because of unseasonal rain in October that affected crops.
The re-opening of educational institutions and the resumption of work in offices are driving the increase in vehicle demand.
Rising vehicle prices and high petrol prices are challenges, but they have not dampened festive sales, says an auto showroom owner.
The spending is also being boosted by credit expansion, which hit a 10-year high of 16.2% in August as firms and consumers took out loans to fund investments and purchases, according to the central bank.
The retail boom is also a boon for the government - goods and services tax collections, a barometer of consumer demand, rose 26% year-on-year in September, data showed.
Aditi Nayar, the chief economist at ICRA, the Indian arm of rating agency Moody's, said the festival sales surge partly reflected pent-up demand but could moderate by early next year.