How hike in Dearness Allowance, Productivity-Linked Bonus is keeping Indian economy chugging

The Retailers' Association of India (RAI) in its latest survey said in September 2022, retail businesses across India reported a growth of 21 per cent in sales as compared to pre-pandemic levels of September 2019.

The world is fearing recession but India is one country that even International Monetary Fund (IMF) acknowledged as a 'brigh star'. At a time when consumer spending is slowing down across the world, in India, the sales have surged amid the festive season which have brought cheers for the consumer goods industry. Traders' body CAIT is expecting up to Rs 2.5 lakh crore infusion into the market through sales and service as early trends indicate robust sales across channels.

Sales of products such as TV, home appliances, FMCG food and non-food, apparel etc from offline and e-commerce channels have recorded almost 8-10 per cent volume growth over the last year's festive season and consumers are willing to spend despite inflationary concerns. Festive season sales start from Onam, covers Durga Puja, Dusshera and ends with Diwali.

Encouraged by early signs, traders' body CAIT expects an "infusion of about Rs 2.5 lakh crore in the markets by way of shopping and sale of goods and usage of service" during Diwali festive season. Moreover, a recent hike of 4 per cent in dearness allowance (DA) benefitting 4.18 million central government employees and 6.97 million pensioners would act as a catalyst.

In addition to this, Productivity-Linked Bonus (PLB) equivalent to 78 days of wages to non-gazetted railway employees is also going to help the consumers in their spending, said the Confederation of All India Traders (CAIT).

"It will certainly trigger the market and the economy. These two decisions of the government will pump thousands of crores of rupees into the economy," said CAIT Secretary General Praveen Khandelwal, adding a good agriculture crop is also expected to bring money in rural India.

According to Consumer Electronics and Appliances Manufacturers Association (CEAMA), sales have picked up after Navratri and will reach their peak near Diwali. The industry is witnessing good traction in sales of LED TVs, washing machines and refrigerators.

"Retail sales have picked up. We are expecting 8 to 10 per cent volume growth for the industry and 25 to 30 per cent by value," said CEAMA President Eric Braganza.

Echoing similar views, Dabur India Executive Director-Sales Adarsh Sharma said:"We expect consumer sentiments to improve as we move towards the peak of the festive season. Food and Beverages and Personal Care are likely to lead the demand growth this festive season, which is expected to be higher than the previous year."

Bikano Director Manish Aggarwal said he has already seen a surge in sales and expects the same to be continued till Diwali.

"We have seen a hike of approximately 15-18 per cent and we are hoping the company's gifting demand will increase this time by approximately 20?25 per cent, and it will be the first satisfactory time in the past years as the pandemic majorly affected our sales in the past two years. We are growing 18 per cent year-on-year post-pandemic," he said.

The Retailers' Association of India (RAI) in its latest survey said in September 2022, retail businesses across India reported a growth of 21 per cent in sales as compared to pre-pandemic levels of September 2019.

RAI CEO Kumar Rajagopalan said, "This festive season is expected to be a return to cheer season. There is a sense of thankfulness and well-being and also a sense of fulfilment of aspirations and luxurious cravings."

Super Plastronics Pvt Ltd (SPPL), which has licences for international brands including Blaupunkt, Thomson, Kodak and White-Westinghouse, is also witnessing growth.

According to SPPL CEO Avneet Singh Marwah, Thomson has seen a growth of over 100 per cent this festive season.

"We have seen a major spike in large screen. Our Qled google TV was sold out on day 1, another category where we have seen growth is front-load washing machines. The market for the mid and premium segment is growing faster than entry-level currently for Thomson," he said.
However, there are some concerns also and according to CEAMA President Braganza, this festive season, sales of products from the entry-level mass segment are not picking up.

"What we are seeing is that entry-level has got affected this festive season and sales of middle and high-end products are better," he said adding though the average selling price would be up, the numbers would be impacted from rural areas.

BNP Paribas India in its latest report on consumer durables said the festival season, which began with Onam "failed to sustain momentum as demand started to taper gradually".

"We expect the softening raw material prices to provide some cushion to brands as they might pass on some benefits through discounting to lure customers back," said BNP Paribas India Analyst (Consumer Durables & Capital Goods), Nilesh Bhaiya.