MUMBAI, October 27 – Hindus around the world on Tuesday celebrate the festival of lights, Diwali — a traditional time to splash out on new clothes, jewellery, rich food and extravagant house decorations.
But with the financial markets in crisis and fears of a global recession, Indian consumers are more cautious this year as concern about its impact takes hold, shoppers in Mumbai said.
"People are spending for their basic needs but they\’re not being extravagant, usually people spend more," said Amit Chopra, as he browsed in Phoenix Mills mall in a central district of India\’s financial capital.
"This year they\’re more careful and watchful of their budgets," said the 33-year-old.
"Look around. There\’s a lot of people but not many bags. No-one is shopping," said Chopra, who works in the clothing sector for the Wills Lifestyle chain.
Phoenix Mills is one of many malls that have sprung up across Indian cities in recent years, providing the expanding middle class with places to spend their cash on designer clothes, electronic gadgets or just a frothy cappuccino.
But before a normally frantic shopping weekend, only the discount Big Bazaar store seemed to be doing trade as upbeat as the Euro pop music blaring out from its loud speakers.
Retail analyst Hemant Patel, from ENAM Securities in Mumbai, said companies were reporting a "noticeable slowdown" in third-quarter sales, while mall owners in Mumbai have also reported a slump in trade.
"We should still see a growth rate of about 30 percent in organised retail (department stores, hypermarkets, chain stores) this year despite all the slow down. It could be 25 percent," Patel told AFP.
However, that compares with 45 to 50 percent annual growth in the sector in the last five years as India\’s economy boomed, he said.
"Friends and family say they\’re spending 50 percent less than last year," said restaurateur Abhishek Dadhia, at the mall with friends to celebrate his 25th birthday.
"People can spend on food but not other things," he added.
One of his friends, Bhakti Mehta, 24, who works in fashion design and merchandising, said she had noticed a definite drop in business.
"People are buying less. They\’re trying to make their clothes last," she added.
Prasannda Ugaonkar, a 46-year-old insurance consultant, said he and his wife, Arti, were "neither spending less nor spending more" than last Diwali but prices had been hit by inflation, which is running at 11.04 percent.
"We are personally not as affected as other countries. India is quite a protected economy. The common man might not get affected much by the US meltdown," he added.
Certainly some exposed to the stock market turmoil have been hit. At least two Indian brokers have taken their own lives in recent weeks because of steep losses.
India\’s benchmark 30-share Sensex index on Friday shed nearly 11 percent to a near-three-year low.
Krishna Mehta, 27, and his fiancee Soni Mehta, 24, were playing a waiting game, hoping for further cuts on already discounted goods in the shops as retailers look to get rid of bulk-bought Diwali stock.
The couple, who work for a brokerage firm at the Bombay Stock Exchange, said there was a "really negative atmosphere" around, impacting on Diwali budgets, particularly for jewellery.
"Gold prices are so high now and people have got less purchasing power," said Krishna.
"A person who bought something for 1,500 rupees (30 dollars) last year is just spending 400 to 500 rupees this year."
Clothing sector-worker Chopra, though, was sure of an upturn, encouraged by government reassurances about bank liquidity and efforts to encourage consumer spending.
"It should only be a temporary thing," he said confidently.