Transcription
[Music] Heat up here. [Music] [Applause] [Music]
Diwali always lights up India. Our cities, our villages, our shops and malls, everything is lit up during this time. It's a period of hope, triumph, and celebration. But this year, it's not just our homes that have lit up. It's also our economy. This Diwali, the Indian economy is shining. All thanks to you, the consumer.
Let's show you the data prepared by the CIT. That's the Confederation of All India Traders. Basically, a top traders's body. They have calculated India's total Diwali sales at 6.05 lakh crore rupees. Six lakh crore rupees. That's around $68.7 billion. It's a record in Indian trading history.
Out of this, $61 billion was spent on goods, things like footwear, garments, electronics. The remaining was spent on services. And this marks a significant rise from last year. In 2024, during Diwali, Indians spent 4.25 lakh crore rupees on goods. This year, it's 5.4 lakh crores. That's a 27% jump in one year. In simple words, it's a spending bonanza. We'll tell you why this is good news for the Indian economy. But first, some trends.
This year, spending was focused on Indian goods. Goods made inside our country. And this was championed by Prime Minister Narendra Modi himself. In a poll, 87% Indians picked Indian goods over foreign ones. And it shows in the sales. Made in India goods recorded a 25% bump.
Trend number two, the service sector is also booming. We're talking about things like eating out or movies. Restaurants and pubs reported an 8 to 20% surge in dining out. That's 8 to 20% higher than last year. And this is despite no GST relief for restaurants.
And finally, trend number three. It's not just Indian metros. Non-metros drove online sales this Diwali. More than 50% of the sales came from tier three cities.
But what does this bumper spending mean for the Indian economy? And can this momentum be sustained? Let's take a closer look.
Consumer spending is key to India's growth. Consumer spending makes up 61% of our GDP. Imagine that. Almost two-thirds of our GDP is driven by consumers. If they spend, India grows fast. If they don't spend, India slows down. And we saw that last year. Inflation was inching higher, incomes were stagnant. So the Indian economy lost its momentum. From July to September in 2024, India grew by just 5.4%. That was the lowest in seven quarters. It was also a warning sign for the policymakers. Our consumers needed some relief.
Which brings us to this year. We had a great monsoon this season. So the food supply and prices were not an issue. In September, India's inflation was just 1.54%. That's the lowest in eight years. Add to that some tax cuts. First, the budget introduced income tax relief, no tax for up to 12 lakh rupees. Secondly, more and more importantly, the GST cuts. Earlier, we had four slabs of GST, the goods and services tax. We had four slabs: 5%, 12%, 18%, 28%. Out of these, 12% and 28% were removed. As a result, a lot of goods became cheaper, like electronics, cars, and daily essentials. They all became cheaper. Clearly, these tax cuts have boosted consumer spending.
And global agencies have taken note. Last week, the IMF, the International Monetary Fund, raised their India growth forecast. They increased it by 20 points to 6.6%. At the same time, they reduced next year's projection again by 20 points to 6.2%. And that sums up India's challenge.
In the short run, these tax cuts will help. It's just basic economics. You cut taxes, you put more money in the hands of people. More money equals more spending. But the question is, how do you sustain it? Most experts are looking at the RBI, the Reserve Bank of India. The RBI cut lending rates once in June, but many are expecting one more cut this year, perhaps in the month of December, a rate cut. Now, as you know, a cut in lending rate boosts spending because lower interest equals cheaper loans, and cheaper loans can spur consumption. So, that's one way to sustain this growth into 2026.
But outside India, challenges are brewing. The biggest being the US tariffs. Donald Trump has imposed 50% tariffs on Indian goods. Those rates hit exports last month. Indian exports to the US dropped last month by almost 12% in September. That was a drop. In comparison, they had risen in August. They had risen by 7% in August. But there's a saving grace, too. India's diversification is paying off. Exports to other markets grew by almost 11%. That's up from 6.6%. 6% the month before.
And yet, worries remain. The tariffs complicate a lot more than trade. For example, it could put US investments in doubt. It could complicate the visa process for Indian workers. So the tariffs are a big headache for India. Otherwise, things are looking up. Inflation is under control. Spending is up and growth is gathering pace. The key is to preserve and build on that.
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