THE SUNDAY STORY The festival season is a time when all sections of Indians hope to boost their consumption. But the cash buffer that normally aids them — a decline in prices of essentials after summer — is disappearing. The culture of ‘buying’ is now a burden for many.
The ebb and flow of seasons still determines patterns of consumption worldwide. Even in the United States, sales in the run-up to Christmas still account for a substantial proportion of the annual total. Indeed, prices peak in the period up to Christmas, and discounts are only offered soon after, not during the festive season, as it happens here in India. “Despite the rise in consumerism, we still appear to be a more humane society,” quips a friend.
But is seasonality a good thing? Are consumers better off if the demand for goods — and their prices — peak at certain times of the year instead of remaining steady throughout? The spike in demand in the period from Dussehra in October to the onset of the New Year accounts for a substantial portion of total annual sales.
Saurabh Rohilla, Associate Director at the Society of Indian Automobile Manufacturers, reckons that vehicle sales — not just of cars but also of commercial vehicles — in this period accounts for about 40 per cent of vehicles sold during the entire year.
But the nature of the ebb and flow of consumption hinges critically on incomes, which, in turn, depend on the nature and quality of employment. Festival-time spending is not all about buying the brand new LED TV, a car or any of the other white goods that are now on display in shop windows. In a highly unequal society such as ours, festivals for most people also mean more, and better, food, even if only for a few days. Given that the proportion of expenditure on food and related expenses is inversely related to incomes, this has important implications for who consumes more of what during the festive season.
D. Narayana, Director, Gulati Institute of Finance and Taxation, Thiruvananthapuram, says that since the summer of 2008, when the prices of food articles started their relentless spiral, something interesting has been happening. In the past, the prices of essentials such as cereals, vegetables and fruits, pulses and edible oils would start their climb in the summer, but would dip somewhat between December and April.
Since 2008, the seasonal spike in the prices of essentials has continued, but their downward movement has become much less pronounced. Thus, they are going up and up and up, says Dr. Narayana, an economist and statistician. “The seasonal decline in prices, which offered a buffer for the poor, a time in which they could recover, is just not there any more.”
Rice prices, for instance, have continuously moved up in the past four years and more, he observes. “The seasonality in price is now virtually absent for these basics,” he adds.
“Festivals,” says Dr. Narayana, “are a time when those lower down the economic scale hope to achieve sufficient critical mass to buy the valuables that they long for.” But the uncertainties of their lives, coupled with the nature of present-day inflation, ensure that they miss the bus every time.
Dr. Narayana, who has extensively studied consumption behaviour, makes another interesting observation: The ‘loan culture’ that facilitates much of the buying of white goods inevitably brings the role of uncertain expectations into play. This is especially relevant for those who work on non-salaried jobs with insecure tenures or those whose incomes are prone to great fluctuations.
In the Wayanad area in Kerala, for instance, where Dr. Narayana has done a lot of field studies, the plight of ginger and pepper growers driven to suicide has been as much about ‘expectations’ of incomes gone awry as it has been about direct agrarian distress. “When the prices of these crops went up, lifestyles underwent a change, but when the precipitous fall in commodity prices happened, growers could not cope with the sudden and unexpected compression in incomes,” he points out.
There is also the ‘cultural burden’ that festivals impose on a tradition-driven and hierarchy-conscious society such as ours. Festivals are the occasion when the parents of newly-wed daughters are forced to buy the goodies that is demanded from them. On the surface, Diwali may appear to be about sparklers and sweets, but there is much misery that lies underneath.