October 31, 2024 - Festivals in India are not merely occasions for celebration; they are vibrant expressions of the country’s historical narrative and collective identity. Each festival embodies the values and beliefs of the communities that observe them, weaving together the threads of mythology, spirituality and everyday life. They serve as a reminder of the country’s multifaceted identity, where ancient traditions co-exist with modern influences. By participating in these celebrations, individuals not only honor their own heritage but also contribute to the ongoing narrative of India - a narrative woven with love, respect and a deep appreciation for the past.

Diwali, often referred to as the Festival of Lights, is one of the most significant and widely celebrated festivals in India and among its communities worldwide. Diwali commemorates the victory of Lord Rama over the demon king Ravana, symbolising the triumph of good over evil. The lighting of lamps during the festival represents the dispelling of ignorance and darkness. The festival also honours Goddess Lakshmi, the goddess of wealth and prosperity.

Diwali and Consumer Spending

Diwali is a peak period for consumer spending, with significant boosts to retail, e-commerce, real estate, automotive and small-scale industries. Businesses rely on Diwali for a large part of their annual revenue. The demand for traditional goods like diyas, rangolis, handicraft items and sweets supports small-scale artisans and rural economies, contributing to sustainable livelihoods. Many consider it an auspicious time to buy gold, make real estate purchases and invest in businesses, further stimulating the economy.

Surge in Shopping

The festival is traditionally associated with shopping for new clothes, home goods, electronics, gold and vehicles, leading to significant retail and e-commerce sales spikes. Shoppers also stock up on sweets, decorations and gifts for family and friends.

This spending surge contributes heavily to sectors like apparel, jewellery, home appliances and electronics. In recent years, the value of Diwali sales has crossed billions of dollars, with e-commerce sales alone accounting for a substantial portion.

Boost for Small and Medium Enterprises (SMEs)

Diwali is especially crucial for small businesses and artisans, who produce handcrafted items like diyas (earthen lamps), decorations and traditional sweets. The seasonal demand provides a large percentage of annual revenue for small-scale industries, helping sustain livelihoods for many families and communities and benefiting rural economies in particular.

Real Estate and Automobile Sales

Real estate transactions rise as buyers look to make property investments during this auspicious period. Developers often offer attractive discounts and payment options to boost sales. The auto industry also experiences high demand. This boosts manufacturing, sales and finance sectors related to the auto industry.

E-commerce Boom and the Q-Commerce

E-commerce giants and brick-and-mortar stores launch special season sales and discounts, which draw significant consumer spending. Many platforms see record-breaking sales during this season, especially for electronics, fashion and home decor.

The rapid growth of Q-commerce (Quick Commerce) in big cities highlights a significant shift in consumer behavior and preferences. Q-commerce allows consumers to order essential items from the comfort of their homes and receive them in just a few minutes or hours. This season has witnessed significant growth of 15-20% in Q-commerce platforms.

Increased Demand in Financial Market

Banks and financial institutions experience a high demand for loans during this period, especially for home, vehicle and personal loans. Many banks offer attractive interest rates and lower processing fees to capitalise on the consumer demand for large purchase and investments.

Additionally, the tradition of muhurat trading (an auspicious stock trading hour on Diwali) generates activity in the stock markets, although symbolic. The event draws significant investor participation and positively impacts the markets.

Travel and Tourism

The holiday period sees increased travel as families gather and tourists visit domestic and international locations. This drives revenue for airlines, railways and the hospitality sector.

Overall Economic Impact

The combined rise in consumer spending, manufacturing and production activity during Diwali contributes significantly to India’s GDP. The season often sets the tone for consumer sentiment and economic momentum for the coming quarters, making it one of the most impactful economic periods in the country.

Record Sales in 2024

This year's record-breaking Diwali spending of Rs 1.25 lakh crore, as reported by the Confederation of All India Traders (CAIT), highlights a strong consumer confidence despite the challenges of high inflation. This level of expenditure not only reflects a deep-rooted cultural emphasis on festive spending but also speaks of a resilient economy with increased purchasing power among Indian consumers. The record-breaking spending in India reflects the significance of festivals in driving economic activity. This phenomenon not only boosts various sectors but also supports the broader economic recovery and growth.

Support for Aatmanirbhar Bharat

The demand for "Made in India" products, supported by the Aatmanirbhar Bharat campaign, has played a role in this economic activity. Consumers are increasingly inclined toward local goods, boosting Indian brands, local artisans and MSMEs. This trend supports local manufacturing and employment, reinforcing the vision of a self-reliant India.

As we head into the end of this year, this momentum is likely to provide a significant economic push, benefitting industries, creating jobs and supporting small businesses across the country.

Dimpy Suhalka is a Udaipur-based Doctoral Researcher in Management, Finance and Economy