Economic revival is expected in India in the third quarter because of consumer spending. Thanks to India’s festive season, one always sees a rise in consumer spending in the country’s third quarter. Even though this has been the trend, last year, a disruption in the trend was seen because of the COVID-19 pandemic, which also created massive havoc in the economy of the country. With the disruption seen in the last year, one might ask if the consumer sentiment will see an improvement this year during the festive season?
Consumer Spending Will See An Improvement In Urban India
According to a survey conducted by YouGov, a market research and data analysts firm, urban India will see better consumer spending this year. The Diwali Spending Index of the firm indicates a higher spending propensity for even precious items like gold irrespective of the Gold Rate. With this expectation in, many outlets and brands are relying on the sales during the festive season this year to make up for the losses faced this and the last year. Also, the economic recovery of the country is highly dependent on it.
The Diwali Spending Index created by YouGov is an indicator of the spending intent among the consumers of India and according to it, one can expect a 90.71 propensity index during the festive season of 2021. The average propensity index is 100, and even though the forecasted number is below 100, it is better than last year as 2020 saw a propensity index of a mere 80.96. The survey indicates a recovering appetite amongst the Indians, especially of the urban region.
How Is The Diwali Spending Index Calculated?
The Diwali Spending Index is calculated with the help of the weighted impact of 10 factors. The different factors which are considered while calculating the Diwali Spending Index include an increase or decrease in the household expenses, increase in gross household income, intent to splurge or invest and further, the general optimism towards the economy, which in turn decides whether one would be spending more or less in the current Diwali season compared to the last year. The factor that occupies the top priority in determining whether someone will be spending in the festival season or not is the anticipation of the festival itself. This year, the survey indicated that because of the dull Diwali last year, many people are looking forward to having a gala time during Diwali this year regardless of what the Horoscope says. Because of the COVID-19, many shoppers for a long time could not spend due to lack of opportunity and this, in turn, has boosted the overall sentiment to spend during the festive season of this year.
Buying Sentiment Still Below Pre-COVID Times
As mentioned earlier, even though the buying sentiment will see an improvement this year in comparison to the urban consumer spending sentiment of last year, the improvement will not meet the buying sentiment which was present during the pre-COVID times. COVID-19 presented the citizens with uncertainty which is still strong amongst them and as a result, many people who participated in the survey conducted confirmed that they are more careful with their finance management due to the uncertainty presented by COVID-19. Another factor that has contributed to it is the fact that along with 2020, even 2021 saw a devastating wave of COVID and even though the situation has improved and the excitement is high, the consumer sentiment will still need some time to match the consumer sentiment, which was present during the pre-pandemic times. The survey conducted by YouGov has confirmed that 29% of the participants involved in the survey have agreed that they would be spending more this year during the festive season in comparison to what they spent during Diwali last year. Even though the spending sentiment is not as high as the pre-pandemic times, one needs to stay hopeful and optimistic and be grateful that a remarkable improvement is visible in the spending intent in comparison to last year, which is not only good for the brands but for the economy of India too. It would be interesting to see when the spending sentiment of the consumers will match the pre-COVID times.