Gujarat Global News Network, Ahmedabad
A quick survey by The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has revealed that people and companies will reduce expenditure during Diwali festival season this year. Companies across sectors plan to tighten their purse strings and slash their corporate gifting budgets by up to 20 per cent.
This is because the onset of festival season has not been very encouraging for India Inc. amid uncertain recovery in economic growth and a deficient monsoon leading to rise in prices of essential commodities, noted the survey by apex industry body.
“Depreciating rupee, weak consumer demand showing up in sluggish sales, muted wage growth, impact of turbulence in global markets are certain key factors forcing corporates to slash their Diwali gift budgets significantly,” the survey observed.
Though in recent times festivals have become an occasion to exhibit luxurious living and with heavy pay packets the spending capacity of people has only grown, however cost of living and prices of food items have grown faster than earnings which is compelling people to refrain from overspending during the festive season, a report of the survey released by ASSOCHAM said.
“A new government had been elected last year which boosted optimism and led to a rise in consumer confidence together with improved job security and a perceptive improvement in business sentiment which encouraged companies to increase their festive budgets by 10-15 per cent last year during Diwali,” said Mr D.S. Rawat, secretary general of ASSOCHAM while releasing the findings of the chamber’s survey.
“But this time around there is a bleak business outlook for trade and industry as government struggles to rev up economic growth and labour market,” said Mr Rawat.
“Even consumers are likely to tighten their purse strings due to rise in prices of essential food items like pulses, edible oil and others due to poor monsoon rains thereby curtailing discretionary expenses and spending on items entailing higher ticket value,” he added.
ASSOCHAM had interacted with about 1,000 working people and 500 companies’ representatives from diverse sectors like automobile, biotechnology, BFSI (banking, financial services and insurance), energy, fast moving consumer goods (FMCG), information technology (IT), pharmaceutical, real estate and others during the course of past three weeks across 10 prominent cities of – Ahmedabad, Bangalore, Chennai, Delhi-NCR, Hyderabad, Indore, Kolkata, Lucknow, Mumbai and Pune to ascertain the individuals’ and companies’ festive plans.
Majority (about 60 per cent) of people said they have shelved plans for expenditure on big ticket items be it automobiles, consumer durables and other non-essentials fearing their companies might cut bonus as they have witnessed a lull in most of this year.
Most of these said they would rather save money for emergencies instead of spending lavishly on festival shopping amid skyrocketing prices of essential commodities and food inflation.
Of the rest, many said they are making a budget for festival spending and will look out for deals to try and take advantage of sales both online and offline. While some said they have not made up their shopping plans as yet.
Besides, over half of the 500 companies’ representatives that ASSOCHAM had interacted with said they plan to cut their festive budgets by at least about 20 per cent as compared to last year. Of the rest, many said they plan to reward only performing employees and premium clients this Diwali as it being an annual ritual of sorts.
Remaining companies’ representatives said they have not made any plans so far in this regard. Decline in profits owing to a lull season, poor monsoon, global slowdown, sluggish domestic investment scenario, high prices, interest rates, weak consumer sentiment, rupee devaluation and others are key reasons highlighted by the companies for cutting their corporate gift budgets, noted the ASSOCHAM survey.
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