What happens when one billion people go on a shopping spree in one of the world’s best performing major economies?

Welcome to festival season in India, a 45-day extravaganza that kicks off this year in mid-September with pre-festival sales and culminates with Diwali, the festival of lights, on November 1. Add in buoyant consumer sentiment, social obligations around gifting, religious and auspicious purchases, family reunions and feasting and you have a recipe for an economically indulgent season.

As part of our “Eventful Economy” series, the Mastercard Economics Institute (MEI) set out to measure the incremental spending boost that can be directly attributed to in-person spending during the festivals of Navratri1 and Diwali2, using synthetic controls3 on aggregated and anonymised Mastercard transaction data4.

Dhanteras, which falls 1-2 days before Diwali (celebrated on November 10th in 2023), is considered as one of the most auspicious days to buy jewellery and gold purchases, evident in the more than 400% boost to jewellery spending on that day, compared to the spending on that day if the festival had not been celebrated.

Spending on apparel was evident throughout the festive period, especially on the weekends, with the weekends that fell during Navratri and Diwali witnessing a much larger boost, rising on average by 49% and 61% respectively (than other weekends during the festive season that saw an average rise of 25%).

Spending on groceries and confectionaries also picked up during the weekends but were nowhere comparable to the surge of over 50% that was seen during Diwali. While these numbers are for the festivals last year, MEI expects a similar boost across these sectors during the festive period this year as well.

Consumers benefit from growing affluence, digitisation

In the years since the pandemic, the Indian shopper has been defined by growing affluence, a rise in aspirations of the middle class, digitisation and financial inclusion. This led to gains beyond the metro cities and an increase in online commerce.

MEI expects this behaviour may continue this year with the following noteworthy trends:

Sales dhamaaka at brick & mortar stores

“Dhamaaka” is the loud noise made by bursting fireworks. Like the festive experience of fireworks, retail stores see a dhamaaka of sales, too. The immersive experience of setting out to shop in the vibrant local markets, lit-up streets and decorated retail stores is an indispensable part of celebrations for most Indian households. As the festive fervour reaches its peak, consumers prefer to shop in physical stores, rather than online, for groceries & confectionaries, jewellery and cosmetics.

Laxmi (Goddess of wealth) favours tier 2 cities over the metros

The festive spirit blurs regional boundaries and envelops the entire country. The nation unites in celebrations, with daily average spending in the capital city of Delhi during Diwali increasing by more than 120% compared to regular days. In the southern cities of Bengaluru and Hyderabad, daily average spending increased by 69% in 2023 compared to regular days. The eastern city of Kolkata experiences the largest increase in daily average spending during both Navratri and Diwali.

Navratri is the biggest festival in the eastern part of the country, culminating in Durga Puja. Over these nine days, the city transforms into a huge carnival of worship, celebration, and feasting, leading to a greater rise in spending compared to other cities. The city’s outperformance during Diwali could be due to the unique convergence of Diwali and Kali Puja – another significant festival for the local community. The spending surge in this city may also be attributed to the large migrant trader and business community of Marwaris, who typically spend heavily on jewellery on auspicious days and lavishly during festivals.

This festive frenzy is not limited to the country’s metropolitan areas. Growing affluence, digitisation and financial inclusion have benefitted consumers in tier 2 cities, where the surge in spending during festivals is notably higher than in tier 1 cities. The boost to average spending per day in tier 2 cities such as Indore, Udaipur, and Lucknow was significantly higher at more than 190% during Diwali compared to regular days and was ~120% in metro cities like Delhi and Mumbai in 2023.

Let the festivities begin!

There’s lots to look forward to this festival season. Sentiment in rural and semi-rural areas is likely to be bolstered by stable prices, normal monsoons and a pickup in rural economic activity. Policy continuity and wealth effects from housing and stock markets might assist demand from the affluent. Emotional jewellery buying, the one-off aspirational luxury purchase, deal hunting for electronics and home furnishings, gifting of confectionaries and of course the ultimate comfort of home cooked delicacies is most likely going to define spending this season. Wishing everyone joyous end of the year festivities!

To learn more about economic insights from the Mastercard Economics Institute, contact your Mastercard representative or request a demo.

Notes & Disclaimer

About the Mastercard Economics Institute

Mastercard Economics Institute launched in 2020 to analyze macroeconomic trends through the lens of the consumer. A team of economists, analysts and data scientists draws on Mastercard insights - including Mastercard SpendingPulse™ - and third-party data to deliver regular reporting on economic issues for key customers, partners and policymakers.

Disclaimer

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Footnotes

  1. Navratri - literally meaning 9 nights - is a Hindu festival for Goddess Durga celebrated over 9 days culminating in Durga Puja – more popular in the Eastern part of the country - and as Dusshera in most other parts of the country.↩︎

  2. Festival period is defined as follows: Diwali period - 7 days before Diwali, 9 days of Navratri↩︎

  3. Using synthetic controls, we create a counterfactual universe that eliminates the impact of the event i.e. festivals. This enables us to isolate the incremental spending boost that can be directly attributed to the festivals.↩︎

  4. Results of synthetic controls are derived from in-person spending data of representative Indian cities.↩︎

  5. Pre-festival sales period is defined as the massive sales seen during week – 10 days before the first day of Navratri↩︎