NEW DELHI (Commodity Online): India's Diwali festival will lose sparkle in 2011 due to steep rise in food inflation that would lead to curtailment of festive spending by middle and lower income families, according to Associated Chamber of Commerce and Industry of India (ASSOCHAM).
An average middle income group has curtailed its spending on such heads by nearly 35-40% in last three months and will continue to do so due to higher food inflation, high interest rates and increased fuel, reveals the recent extensive ASSOCHAM survey. On the other hand, Lower income group has slashed their Diwali budget by 55-60% during the festive seasons.
In a recent ASSOCHAM Survey on "Soaring prices dampen Diwali festivities” conducted under aegis of ASSOCHAM clearly found a distinction that during last year middle and lower middle income families on average spent a sum of Rs. 3,000-4,000/- on Diwali for shopping, sweets, gifting etc.
This Diwali, it has taken a severe hit as 85% respondent said that the actual consumption expenditure has come down to less than Rs.1800-2,400/-, adds the survey in which nearly 2000 people responded on their latest spending habits during the festive seasons.
The survey was conducted in a period of two months beginning September to October 2011 in major places like Delhi, Mumbai, Kolkata, Chennai, Ahmedabad, Hyderabd, Pune, Chandigarh, Dehradun etc. A little over 200 employee were selected from each city on an average. Delhi ranks first in curtailing their expenses followed by Mumbai (2nd), Ahmedabad (3rd) Chandigarh (4th), Kolkata (5th) and Chennai (6th),
The survey reveals that double digit food inflation and higher cost of borrowing virtually unaffected high income group in the period as it did not imbalance their earnings and spending.
ASSOCHAM survey in majority of metro & other cities reveal that lower and middle income group, increasingly are uncomfortable with the rising level of inflation and are fading the lights of festivals. Many lower and middle income groups indicate that they are finding ways to cut back spending now or indicating they will do so in the future.
Nearly 69% of respondent said that they avoid shopping altogether or shop only for those things that are absolutely needed occasionally. Moreover, 65% said that they have restricted gift item, sweets this Diwali.
Over 87% of the respondent said that monthly grocery bills have jumped to about Rs 4,500/-, compared to Rs 2,000 in the last several months. The prices of vegetables and bakery products have also risen in the last few months. Obviously, this has affected Diwali celebrations.
Majority of the respondent said that increased prices during the festival are robbing the pockets of the common man. With most of the items expensive, people are cutting down the quantity.
Over 89% of respondent also mentioned, “It’s not just clothes that are costlier; the sweets and savouries are also priced higher by 25-30% this year. The price of sugar has increased the sour of sweets this festive season. Milk, butter, sugar, dry- fruits, flour and labour charges everything that goes into making an irresistible sweet has turned dearer. On the other side, dry fruit & sweets are the most expensive item of Diwali. So, everybody is feeling the pinch of rising cost of every commodity”.
The price of gold is a big deterrent, the festive season calls for buying something made of this precious metal (Karva Chauth, Diwali, Dhanteras etc ) but going by the global rise in gold prices there is no denying the fact that one needs to find an alternative to gold, added majority of the respondent.
Over the last five years, income has halved and expenditure has doubled. There has been more than 80 to 100% rise in the prices of vegetables and other essential items.
Nearly 82% of respondents said that earlier they could buy a bag full of vegetables for Rs 100. Now, even Rs 500 isn't enough to sustain us for a couple of days. The middle class and the lower class are the worst hit. A mobile SIM card comes for Rs 10 whereas you need to pay more than Rs 500/- to buy vegetables to last you a week, added the majority of respondents.
Over 62% of the respondent said, “this Diwali they are going to make sweets and savouries at home itself as it will definitely save money and time also. So they may save around 20-30% by relying on in-house resources.”
ASSOCHAM findings are as follows
- Average monthly expenditure has increased from Rs. 4,500 to Rs.2,000. More importantly, food expenditure as a percentage of monthly household expenditure has gone up from 40% to 80%.
- Consumption of individual food items show a significant reduction as well, particularly in case of rice, wheat, yellow daal, onion, tomato, butter, milk ,sugar and fruits and vegetables. For instance, the number of households consuming rice at least once a day has come down from 150 to 80. The number of households consuming milk at least twice a day has reduced from 200 to 80.
- The growing food budget has invariably led households to cut costs in other areas such as healthcare and transportation. For instance, 65% of the surveyed households now go to government doctors instead of private doctors. 40% of surveyed households report walking instead of using vehicles.
-Households have also been forced to adopt other coping strategies. Over 70% of the households report using up savings, selling valuables, or taking a loan to finance their monthly cash requirements
