The recent goods and services tax (GST) reforms have spurred consumer spending on items such as cars and kitchen appliances during the festive season, offering a boost to the economy after the 50% tariffs imposed by the US, according to Bloomberg. Data from retail intelligence firm Bizom shows that consumer expenditure from September 22 to October 21, covering the period between Navratri and Diwali, increased by 8.5% compared with the same period last year. Overall sales across India reached ₹6 trillion ($67.6 billion), with strong demand for jewellery, electronics, apparel, home furnishings, and sweets, noted BC Bhartia, national president of the Confederation of All India Traders.
The tax cuts significantly benefited the automobile sector, with leading carmakers like Maruti Suzuki, Tata Motors Passenger Vehicles, and Mahindra & Mahindra reporting higher monthly sales. Hyundai saw a 20% rise on Dhanteras compared to last year, while Tata Motors sold over 100,000 cars between Navratri and Dhanteras. Mahindra also reported a 27% jump in tractor sales, aided by favorable monsoon conditions that improved rural incomes. Financial services firms, including Kotak Mahindra Bank and SBI Cards, saw growth across various categories, while kitchen appliances, such as pressure cookers, experienced a noticeable boost in sales due to the tax cut, according to Crompton Greaves CFO Kaleeswaran A.
However, the tax reforms also disrupted supply chains for some businesses, as companies rushed to sell at pre-reform rates. Additionally, many consumers delayed major purchases until prices dropped in late September. Nomura economists Sonal Varma and Aurodeep Nandi noted that part of the sales increase may be due to pent-up demand and stressed that longer-term trends from December to January will provide a more accurate picture. Despite slower income growth, a weak labor market, and reduced wealth effects limiting overall demand, firms remain cautiously optimistic. Crompton’s Kaleeswaran expects sales momentum to continue into the new year, with growth in real estate, wiring, and household segments signaling improving consumer confidence.
