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With consumer sentiment getting a major boost from the recent GST rate cuts, total consumer spending during this festive season is expected to be in the range of Rs 12 lakh crore to Rs 14 lakh crore, according to a report by the Bank of Baroda.
The report noted that total consumption spending related to festivals, including marriages, is projected to be between Rs 12 lakh crore and Rs 14 lakh crore. The key segments that will account for the bulk of this spending include clothing, marriages, electronics, and automobiles. Daily consumption goods, such as food items and other FMCG products, have been excluded from this analysis. It stated "we estimate a significant boost to consumption in the range of Rs. 12 lakh crores to Rs. 14 lakh crores, with a major proportion of this spending being accounted for by wedding-related expenses". The festive season in India also marks the beginning of the auspicious marriage period, which is another major driver of consumption. Estimates suggest that around 1 crore marriages take place in India every year, with nearly 60 per cent of them occurring between October and December. Based on these figures, and taking into account spending patterns across different income groups, the report estimates that the marriage segment alone will lead to an expenditure of Rs 4.5 lakh crore to Rs 5 lakh crore. The report added that India continues to remain on track to be the fastest-growing major economy in the world. Despite challenges on the external front, such as tariff-related uncertainties, India's growth remains largely insulated due to its domestic consumption-driven nature. In this context, the recent changes in the GST rate structure have emerged as a major positive for consumption growth, particularly as they coincide with the festive period and the marriage season. The analysis highlights that a major portion will come from wedding-related expenses, followed by strong demand in clothing, automobiles, and electronic goods. Additionally, sectors such as FMCG and quick service restaurants (QSR) are expected to benefit from higher individual consumption as well as gifting-related purchases. Travel sectors, including aviation and railways, are also likely to witness increased demand. According to the report, these spending estimates represent actual consumption and are expected to provide a strong boost to overall economic growth, supporting a revival in urban consumption and private sector investment. (ANI)
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