Companies across sectors plan to tighten their purse strings and slash their corporate gifting budgets by up to 20 percent ahead of the festival season.
"Depreciating rupee, weak consumer demand showing up in sluggish sales, muted wage growth, impact of turbulence in global markets are certain key factors forcing corporate to slash their Diwali gift budgets significantly," states a quick survey by apex industry body ASSOCHAM.
Though in recent times, the festivals have become an occasion to exhibit luxurious living and with heavy pay packets the spending capacity of people has only grown. However, the cost of living and prices of food items have grown faster than earnings which is compelling the people to refrain from overspending during the festive season, highlighted the survey conducted under ASSOCHAM Social Development Foundation.
"A new government had been elected last year which boosted optimism and led to a rise in consumer confidence together with improved job security and a perceptive improvement in business sentiment which encouraged companies to increase their festive budgets by 10-15 per cent last year during Diwali," said ASSOCHAM secretary general D.S. Rawat.
"Even consumers are likely to tighten their purse strings due to rise in prices of essential food items like pulses, edible oil and others due to poor monsoon rains thereby curtailing discretionary expenses and spending on items entailing higher ticket value," he added.
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ASSOCHAM interacted with about 1,000 working people and 500 companies' representatives from sectors like automobile, biotechnology, BFSI (banking, financial services and insurance), energy, fast moving consumer goods (FMCG) and others.
Majority (about 60 percent) of the people said they have shelved plans for expenditure on big ticket items be it automobiles, consumer durables and other non-essentials fearing their companies might cut bonus as they have witnessed a lull in most of this year.
Decline in profits owing to a lull season, poor monsoon, global slowdown, sluggish domestic investment scenario, high prices, interest rates, weak consumer sentiment, rupee devaluation and others are key reasons highlighted by the companies for cutting their corporate gift budgets, noted the ASSOCHAM survey.
