Story Of The Week

Big Indian Festivals and their effects on the Indian Economy

“Greatness of a culture can be found in its festivals”

– SIDDHARTH KATRAGADDA

Festivals in India

The biggest Indian festival season is about to kick on. A time to splurge by consumers & an opportunity for businesses to increase their turnover by making maximum customers turn their way in search of massive and appealing discounts and offer deals. India is a country of diverse cultures & religions as reported by Rajya Sabha, India celebrates 51 festivals in a year, consisting of 17 nationally recognised festivals.

A country where big and expensive decisions are religion driven due to the faith and rituals and traditionality the Indians follow. To make the most of these festivals, retailers & other vendors offer various incentives like discounts & freebies to attract more customers. Festivals incite a feeling of togetherness in the society as well as the economy, working as stimuli for the market forces.

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Boost in Indian economy

Despite having a slow economy & a dip in the Gross Domestic Product of India in last quarter, Indian festivals will provide a respite to the Indian economy. A sector that has enjoys majorly during the festive season is the e-commerce sector.

Last season, India witnessed a face-off between the biggest competitors in the e-commerce sector — Amazon & Flipkart. Flipkart claimed that their sales doubled when compared to the previous year during the festival season, while Amazon didn’t comment on its overall sales but stated about a 150% increase in sales in the smartphone category & a 3.7 times sales rate in the large appliances category.

According to 2011 enumeration, we have 2.1 million temples the nation over which draw in a tremendous load of riches through offerings. Temples and festivals together lift up the entire economy, flourish the business and keep Indian economy booming through expenditure balance.

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India as a festive economy

ASSOCHAM estimates data on various festivals in India and their impact on the Indian economy.

Ganesh Chaturthi to generate about Rs 20,000 crore business across its presence for 10 days with 20 percent CAGR, particularly in the states of Maharashtra and Telangana. Hyderabad, on the other hand, alone generates Rs 5,000 crore business in Ganesh Chaturthi festival and is an employer for more than 20,000 families during the peak season as well the year round.

Like Ganesh Chaturthi, Durga Puja contributes to about Rs 40,000 crore business in India with almost 35 percent CAGR, major of which is in West Bengal. Event management companies all over the world including companies from France and the US are engaging in Kolkata in supporting the entire caravan of the festival including advertisements and cultural event programmes at Durga Puja pandals. During the whole occasion of Durga Puja, food and beverages also generate Rs 50-60 crore business.

All the festivals in India shoots-up the unorganised economy on a large scale and provide enormous employment opportunities for low-skilled and traditional manufacturing sector along with small to micro level entrepreneurs. Raksha Bandhan festival generates about Rs 400 crore business also provides employment to more than 4,000 families in Gujarat.

During Diwali, electronics, automobiles, and apparel dominate the share of businesses around the country with a whopping 52 percent of the apparel products sales take place and every individual spends 20 percent additional for various celebration reasons.

The International Kite Festival, Uttarayan, in January, generates about Rs 500 crore business in the country with a large part of it in Gujarat, Uttar Pradesh, and Delhi. Kite festival provides a boost to the kite industry which employs about 6000 families of Gujarat.

India’s festive season — China’s Delight

India is the largest consumer of Chinese products, a market of about $72 billion, importing all sorts of goods like toys, crackers, lighting, electronics, gift items, watches etc. Most of these products are being purchased during the festive seasons and these cheaper Chinese goods give tough competition to Indian manufacturers and are a threat to their livelihood. Most of these items are produced in small and micro industries in India with a small investment, low technology and lack of skill. It is hard for them to compete with the large-scale, low-cost produce by Chinese counterparts.

According to a survey done by ASSOCHAM in different parts of the country, 8-10 Lakh jobs are being lost due to Chinese products capturing Indian market on Holi. 75% of colours as well as a huge share of plastic products and water guns used in India last year were from China. On Diwali, according to Tamil Nadu Fireworks and Amorces Manufacturers Association, 40% of the Rs 10,000 crore fireworks business was captured by Chinese products, affecting 2.5 lakh Indian artisans adversely.There are many other instances too like when China dumped a lot of Vinayaka idols at cheap prices to shut down Indian idol manufacturing units.

Impact on Retail Market — the play of numbers

The winners in the festival season in e-commerce were Flipkart’s “Big Billion Days Deal”, Snapdeal’s “Yeh Diwali Dil ki Deal” & Amazon’s “Great Indian Festive Sale”. It is an appreciable fact that out of the three Giants, two are India’s own homegrown online commercial centres.

The economy banks on festivals to boost its GDP numbers.As we enter the official festival season of the year, the conditions are conducive to increased spending, despite skirmishes on the border. Flipkart earned ₹1,400 crore on the first of its Billion Days, the highest sales it has recorded in a day.

The new RBI Governor, Urjit Patel, has sweetened the deal by lowering interest rates, and companies in auto and FMCG sectors are salivating over the speed at which cash registers will roll this month. Auto sales were already up 21 percent in September, compared with last year.

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Diwali — the lighting to the sellers

Diwali, which the country will celebrate later this month, is unquestionably the biggest shopping stimulus. Right from the neighbourhood mithaiwala and grocery store to white goods and gold retailers, everyone cashes in on the celebratory mood.

Companies from sectors such as auto, FMCG and white goods generate up to 35 percent of their annual sales during Diwali and the remaining part of the festival season. It helps as almost all of them come out with new models and products to lure the buyer. This automatically helps India strengthen its economy. We get the maximum number of public holidays a year globally, and it ensures that all through the year, our GDP keeps getting boosters.

None might compete with the grandeur of Diwali, but other festivals to pass out with impressive numbers. Ganesh Chaturthi, which just went by, might not be as widely celebrated as Diwali, but still managed to provide a ₹25,000 crore-push to the economy. In Mumbai, just one Ganesh idol was insured for ₹300 crore. Down south, Pongal and Onam are the biggest shopping seasons in Tamil Nadu and Kerala. And Dussehra has a similar impact in West Bengal. Fortunately for us in India, the busy festival calendar makes sure we have many reasons to celebrate and spend.

The way ahead for Opportunists

To close with we have distinguished 3 key open doors for Indian Economy concerning prosperous  business shopping during celebrations

1. Traditional Indian Holidays

With an exceedingly high number of festive occasions being celebrated in India, which incorporates everything from Pongal to Raksha Bandhan, there are unquestionably a considerable number of occasions for online merchants and sellers to contemplate over. Paytm even specified the commitment of the Indian Wedding season to its deals.

2. Marketplace events

The ascent of marketplace events, for example, Flipkart’s Enormous Billion Days Deal to correspond with Navratri and Myntra’s ‘Finish of Reason Deal’ to take after the finish of the festive season, has inspired an emotional response with customers and merchants alike.

3. Global Occasions

Worldwide Events like  Thanksgiving and Black Friday are additionally giving incredible breadth to Indian online dealers to exchange goods and services over borders. To place things in context, as of now the Indian Festive season is worth $8 billion, while in the US it has touched $69 billion.

Conclusion

Festivals bring a breath of fresh air for the economy, separating the pertaining market forces & sentiments of consumers.

They provide a great boost to the businesses in the economy. This opportunity needs to be fully exploited by our India Manufacturers especially the small-scale producers. The scale of Indian manufacturing needs to increase and we should promote to celebrate swadeshi festivals with swadeshi items.

As our Prime Minister  Narendra Modi has stated, “Let us vow that by 2022 when we check 75 years of Independence, we would take the country to more noteworthy statures of advance. Give us a chance to submit ourselves as a person, as a national, as a general public and association that we would contribute to the advancement of the nation” through empowering swadeshi logic and economy.

References

http://www.dailypioneer.com/columnists/oped/dragon-gobbling-up-indian-festival-economy.html

http://www.livemint.com/Industry/qi9B7cid4qGOaiXUFmXTdI/Ecommerce-may-be-the-winner-amid-GDP-growth-gloom.html

http://www.dailypioneer.com/columnists/oped/dragon-gobbling-up-indian-festival-economy.html

http://www.firstpost.com/business/festival-season-sales-e-commerce-is-battling-note-ban-gst-blues-paytm-mall-may-just-muddy-the-waters-more-4042055.html

https://googleweblight.com/i?u=https://www.biz2credit.in/blog/2017/09/20/festive-season-durga-puja-dussehra-dandiya-business-to-invest/&grqid=Yu0-R0X5&hl=en-IN

https://www.extension.umn.edu/community/news/community-festivals/

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