Moneycontrol Pro Panorama | Beyond the festive glow

India must cultivate steady, year-long consumption, not rely solely on fleeting festive surges that fade into embers.

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This Diwali has brought smiles to the faces of shop owners and industries as shoppers returned in hordes. Jewellers had their best festive season ever with Rs 85,000 crore in jewellery sales over Dhanteras. The automobile sector also recorded bumper sales with a 34 percent growth during Navratri, and projected total festive trade crossing Rs 5 lakh crore.

Markets were full of shoppers who returned to physical stores, preferring the touch-and-feel experience over online shopping. But as the festival lights dim and the excitement fades, a critical question emerges: What happens next?

The immediate future appears decidedly mixed. The GST 2.0 reforms —slashing rates on automobiles from 28% to 18% and simplifying tax slabs — have fundamentally altered India's consumption landscape. Unlike temporary promotional schemes, these structural changes promise enduring benefits: lower inflation trajectories, streamlined supply chains, and potentially sustained GDP growth.

The reforms have injected Rs 10,000-15,000 crore in additional disposable income across households, creating a foundation that extends beyond festive fervour. Rural India, buoyed by an eight-year high in wage growth following exceptional monsoons and a robust kharif harvest, presents genuine resilience that could sustain consumption through the coming quarters.

However, the view is not as clear from where we are presently. The phenomenon analysts term "demand pull-forward" poses the most immediate threat. When consumers accelerate purchases to capitalise on discounts and tax benefits, they aren't creating new demand — They're merely borrowing from the future.

The automotive sector exemplifies this risk acutely: with dealer inventories swelling to 60 days and September's first three weeks showing muted sales as buyers waited for GST implementation, the explosive festival numbers likely mask a temporal shift rather than genuine expansion. Come January and February, dealerships may confront sobering slowdowns as the advance rush subsides.

Urban India's trajectory looks particularly precarious. Stagnant wages in metropolitan centres, the weakening IT sector, and global headwinds, including potential US tariff escalations, threaten the consumption engine that has traditionally driven India's growth.

Recent PMI data reveal subtle but concerning slippage while declining air travel numbers suggest that affluent urban consumers—typically bellwethers for broader economic health—are pulling back.

The jewellery sector's shift from gold ornaments to coins and bars, driven by 60 percent price increases, signals defensive rather than confident consumption patterns.

Easy EMI schemes and aggressive promotional offers during festivals can mask underlying affordability constraints.

The coming months will reveal whether India has turned the corner. Policy reforms spark hope, but urban economic slowdown and skewed demand patterns urge restraint. For lasting growth, India must cultivate steady, year-long consumption, not rely solely on fleeting festive surges that fade into embers.

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Shishir Asthana
Moneycontrol Pro