Asia’s third-largest economy battles waning consumer demand
MUMBAI: For Indian executive Bibhas Chakraborty, Diwali used to mean shiny expensive gifts from business associates keen to use the auspicious-and spectacular-Hindu festival to deepen ties. Now it’s mostly sweets and nuts. As Asia’s third-largest economy battles waning consumer demand, extravagant corporate gifts risk becoming a thing of the past, leaving many worried that this weekend’s festival of lights-and presents-is losing its luster.
“Earlier, the quality of gifts we received was higher and often included gold and silver-plated picture frames or bowls. But now, with the economic slowdown, that’s all changed,” Chakraborty, a Mumbai-based 48-year-old, told AFP. “The joy of opening wrappers to find surprising items has been replaced with the usual sweets… which has taken the sheen off the festival somewhat.”
India’s corporate gift industry usually works overtime in the run-up to Diwali to meet a surge in demand-with the annual ritual seen as a convenient way to nurture business relationships while avoiding accusations of outright bribery. But in Mumbai’s busy Mangaldas market, a street lined with shops offering festive discounts, third-generation entrepreneur Jatin Shah is a worried man.
The owner of Rainbow Dry Fruits, an 80-year-old gift packaging firm, Shah added 20 temporary workers to his staff of 15 to account for the anticipated Diwali rush. But orders have yet to materialize. “In previous years… we would work till two in the morning. Now since the orders are lower in size and scale, we finish work and pull down the shutters by 10 pm,” Shah told AFP.
Even orders for the cheapest items-small boxes of Indian almonds, walnuts, and cashews-have fallen by more than half, he said, bringing down the firm’s annual turnover by 35 percent and leaving him with no funds for employee bonuses, another Diwali tradition. “Diwali is not only the festival of lights but also represents economic prosperity,” Shah said. Hindus mark Diwali with prayers to Lakshmi, the goddess of wealth, and the weeks leading up to the holiday usually see an uptick in consumer spending, similar to Thanksgiving or Christmas in the West.
Mood of gloom
But this year Indians don’t appear to be in a mood to spend, with the slowdown hitting sales of everything from cars to cookies. “I am not sure if there will be many gifts coming my way this year,” said finance executive Chakraborty. Some of the biggest companies have slashed their corporate gift budgets for Diwali, said Ritu Grover, CEO of TGH Lifestyle, which works with more than 350 firms including telecom giant Airtel and IT outsourcing firm Wipro.
Analysts said the curtailed spending was a reflection of the gloom surrounding the business community, with economic growth its most sluggish in years. “Reduction in corporate gifting is an indicator of economic slowdown and there is no ambiguity on that front,” N. Chandramouli, chief of Mumbai-based TRA Research, told AFP. “All indicators show it is going to be a slow Diwali this year.”-AFP