The festive season in India has always been a time of joy, celebration, and, importantly, spending. This year, the country is witnessing a remarkable surge in consumer confidence, driving a significant boost in various sectors of the economy. From electronics to real estate, and from cars to cosmetics, Indians are opening their wallets wider than ever, showcasing a robust domestic consumption-driven growth.
Unlike the export-oriented economies of East and Southeast Asia or the investment-driven growth model of China, India’s growth engine is its domestic market. This year, the strength of this market is more evident than ever.
Sales of cars, TVs, mobile phones, and other consumer goods have already surpassed last year’s total festive season spending, and we are only halfway through the celebrations.
One of the most striking phenomena this festive season is the unprecedented demand for premium smartphones. Data from Counterpoint Research reveals that iPhone sales alone crossed a staggering 1.5 million units in just the first week of festive sales. The overall smartphone market in India saw an 8% increase in volume and a remarkable 25% increase in value between October 8th and 15th. This trend is not limited to smartphones; TVs, accessories, and other electronic appliances are also flying off the shelves.
But what is driving this surge in consumer spending?
A combination of rising incomes and increasing confidence in the future seems to be the answer. The Reserve Bank of India’s Consumer Confidence Survey reflects this optimism, with the Current Situation Index reaching a four-year high and the Future Expectations Index at its highest since July 2019. People are feeling good about the economy, and they are showing it through their spending habits.
The real estate sector is also riding the wave of consumer confidence. After years of stagnation, the property market is finally seeing signs of revival. Buyers are back, and sales are up, adding another layer to the story of India’s economic resurgence.
High-frequency indicators like GST revenues and core sector data are also pointing towards a splurge in shopping this festive season. Car sales touched a historic high in September, and GST collections remained robust at over Rs 1.62 lakh crore. States such as Maharashtra, Karnataka, Tamil Nadu, and Andhra Pradesh registered impressive year-on-year growth in GST revenues.
The performance of eight core infrastructure industries, which have a combined weightage of 40.3% in the Index of Industrial Production, grew 12.1% year-on-year in August, hitting a 14-month high. This growth is a clear indicator of the positive momentum in the economy, setting the stage for a strong industrial production performance.
Despite some concerns about muted consumption demand due to the downturn in export markets, the strong domestic demand is helping to sustain growth. Online retailers are gearing up for strong sales, expecting every household to spend more during this festive season. The demand, as measured by private final consumption expenditure, is likely to be higher due to a weak base last year and some cooling off in inflation.
India’s festive season this year is not just a time of celebration; it is a time of economic rejuvenation. The surge in consumer spending, backed by rising incomes and increasing confidence in the future, is driving growth across sectors, from electronics to real estate. The robust domestic demand is setting India apart from other Asian economies, showcasing the strength of its growth engine. As the festive season continues, there is a festive cheer in the air, not just for consumers, but for the entire economy.
