Dear Readers,
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Wishing you a very happy Diwali!
Trust your Diwali celebrations are going in full swing. It is that time of the year when happiness, excitement and anticipation fill the air.
Last week, I was in Delhi and caught a glimpse of the festive shopping rush. Shops were beautifully decorated and overflowing with gifts. Glittering electric lights, lanterns, diyas, earthenware and colourful decorations had transformed the markets. The excitement was everywhere.
Diwali is a bigger festival in northern India, but its economic footprint extends across the country. Being a Mumbaikar, I know a few pockets of the city where it becomes difficult to even take a step during the peak shopping days. People plan for Diwali throughout the year, often travelling back to their hometowns to celebrate with family. I have seen several colleagues preparing for their journeys. It is not easy, with trains packed and airfares shooting up, but the desire to be with family during Diwali remains deeply rooted in our culture.
I am sure your own plans for the celebrations are also taking shape. Have you participated in the office skits organised by your HR teams? Apart from inviting vendors and setting up festive stalls, HR departments usually plan a range of activities. We had several skits at our office too, and it was wonderful to see colleagues enjoying themselves in traditional attire. Needless to say, Diwali celebrations are incomplete without games, particularly housie!
But while these celebrations are taking place in offices and homes, there is another question worth asking: How will this Diwali turn out for businesses and, more importantly, what will it tell us about the Indian economy?
Last year, the government’s GST restructuring gave consumption a significant boost, as lower tax rates improved affordability across several product categories. This year, there is no comparable new tax stimulus to provide an additional push. At the same time, inflationary pressures, uneven rural demand and uncertainty over household purchasing power remain concerns.
Diwali offers: Businesses gear up for the festivities
Businesses and financial services companies have pulled out all the stops for the festive season. Banks have introduced attractive offers, including reduced processing fees and affordable EMIs on personal, automobile and home loans. Credit card companies are offering enhanced rewards and discounts.
E-commerce companies such as Amazon and Flipkart have launched their festive sales, while quick-commerce platforms have joined the race with special gifting options. Brokerage firms have also released their Diwali stock picks for Vikram Samvat 2083 ahead of the auspicious trading session.
The scale of online festive business is considerable. Datum Intelligence’s September 2026 Festive Barometer estimates online festive sales at Rs 1.5-1.55 lakh crore, 25-29% higher than last year’s Rs 1.2 lakh crore. Around 20 million additional shoppers are expected to contribute to the growth. The average basket size, however, is projected to decline by 1.5%, suggesting that more shoppers and frequent purchases, rather than larger individual orders, are driving the expansion.
Will the demand materialise?
Economists, financial analysts and policymakers will be watching this Diwali closely. The absence of last year’s additional GST stimulus makes the season an interesting test of underlying consumption demand.
In my view, festive demand is one of the strongest barometers of actual consumption in India. More importantly, it offers an indication of where the consumption cycle is heading.
The survey found that 72% of respondents planned to spend more this festive season than last year, while 48% intended to increase spending by more than 10%. The estimated median budget rose marginally to Rs 12,500 from Rs 12,200. But the share planning to spend more than Rs 50,000 fell from 12% to 7%. The findings point to a wider willingness to spend, but not necessarily a greater appetite for high-value purchases.
Why does this matter?
On the one hand, several high-frequency indicators point towards economic resilience. GST collections have remained robust, and businesses are reporting healthy activity. On the other, the purchasing power of households is being tested by rising prices and uneven income growth.
Food inflation is a particular concern. According to the government’s September CPI data, retail inflation rose to 5.54%, while food inflation climbed to 7.74%. Rural inflation stood at 6.08%, considerably higher than urban inflation of 4.88%.
For rural households, higher food bills can leave less room for discretionary purchases such as clothing and consumer durables. The monsoon ended with an all-India rainfall deficit of around 13%, although kharif sowing recovered to just 1.2% below the previous year’s level. The effect on rural consumption will depend on regional crop yields, farm incomes and irrigation support.
The changing consumption basket
Another interesting aspect of this year’s festive season is the changing composition of consumer spending.
Online grocery sales are projected to grow 41%, appliances 35% and personal care 33%. Mobile phones, traditionally a major category during festive sales, are expected to grow by just 6%. Their share of online festive sales is projected to fall from 35.2% to 29.8%. Consumers appear to be distributing their budgets differently, with everyday essentials and household purchases gaining ground.
Quick commerce is another major beneficiary of this shift. Its share of online festive sales is expected to rise to 16%, from 12% in 2025, taking estimated sales to Rs 24,000 crore. Some of this growth, however, represents purchases moving from scheduled online grocery orders to quicker delivery platforms, rather than entirely new consumption.
This is also changing the way consumers shop. Rather than making one large purchase, households are increasingly distributing their spending across several smaller orders.
The festive season is equally important for banks, NBFCs and credit card companies. Consumer financing plays a significant role in supporting purchases of automobiles, electronics and household appliances.
Consumers want access to affordable credit, but lenders are becoming more selective about extending it. The challenge for financial institutions will be to support consumption without compromising asset quality.
Other worries, and some positives
There are other factors that could influence consumption. Earlier increases in crude oil prices and the rupee’s depreciation have raised concerns about imported inflation and higher input costs. Crude has eased in recent sessions, offering some relief, but volatility in energy markets and continued rupee weakness remain risks for businesses dependent on imported inputs.
However, there are positives too. Public capital expenditure remains an important support for economic activity. Merchandise exports have shown resilience, and India’s expanding trade engagement could provide opportunities for businesses over the medium term.
More importantly, some early festive indicators are encouraging.
October GST collections rose 22.9% year-on-year to Rs 2.31 lakh crore, the second-highest monthly collection on record. Likewise, passenger vehicle wholesale dispatches in October are estimated to have reached 5.25-5.30 lakh units, up around 13-14% year-on-year.
These indicators suggest that the economy has entered the festive period with reasonable momentum. But they do not necessarily mean that all sections of the population are participating equally in the consumption recovery.
A season of hope
Newspapers, television channels and Instagram are flooded with festive advertisements. Small businesses have crafted special products, food companies are working around the clock, and logistics companies are preparing for the rush. I see delivery riders and vans carrying goods to offices and homes amid the festive bustle. Stores are beautifully decorated and illuminated, with hoardings advertising special offers.
But will customers turn up? Will demand pick up? More importantly, will households have enough disposable income to spend?
This year’s festive outlook is not a straightforward story of either a consumption boom or a slowdown. People are shopping more frequently, but they are also looking harder for discounts and affordable instalments. The willingness to spend is evident, though the choices households make reflect the limits of their budgets.
Diwali brings hope and positivity. I remember an auto driver during my Delhi trip telling me how excited he was about the festival. He expected business to be very good and hoped to earn well during the festive period. He was willing to miss Diwali with his family back in Bihar if that meant he could earn more money during the season.
His story stayed with me. It also reminded me that the festive economy is not just about sales figures, stock market performance or GST collections. It is about millions of people hoping to earn a little more, spend a little more and make the festival special for their families.
Wishing you a very happy and safe Diwali!
Please share your feedback, suggestions if any. You can reach me on amol.dethe@timesinternet.in.
As usual, I am adding here the top 5 stories of the week, trust you will find them meaningful.
1. SEBI revisits startup listing rules after IGP fails to gain traction
2. PVR INOX plans 150-175 new screens a year from FY28, most to come through asset-light model: CFO
3. Festive season delivers steady growth for retailers amid challenging macros, CFOs say
4. Gross GST collections rise 22.9% to Rs 2.31 Lakh Crore in October, net revenue up 25.6%
5. TVS family succession dispute raises governance questions for listed companies, says InGovern
Happy Reading
Amol Dethe,
Editor,
ETCFO
(Editor’s note is a column written by Amol Dethe, Editor, ETCFO. Click here to read more of his articles exploring several buzzing topics)
