Get ready for an austere Diwali: Fall in rise in interest rates to upset festive purchases
MUMBAI: Although the festive season is just around the corner, many Mumbaiites are in no mood to splurge because of battered rupee. The interest rates on loans are also set to increase.
“About six months ago, I’d planned to get my first car during Diwali. But the rates have increased over the period. If the costs do not come down, I will have no choice but to wait until December,” said Jaimin Shah, 28, an educational trainer living in
Kandivli.
Consumer spending may be further affected with the increase in repo rates brought about by the Reserve Bank on Friday, which is bound to increase EMIS.
One of the sectors not expected to see a high festive demand this year is the auto industry. The industry usually sees a rise of about 40% in sales during the festive season.
This year, according to industry experts, the sales are expected to be below 30% at best.
“The depreciation of the rupee impacts component import costs, and overall, it has an adverse effect on the demand for goods. This year, the festive sales may not be on par with last year’s,” said Rakesh Srivasthava, senior vice president, marketing, Hyundai Motors India Limited.
Dhaval Sheth, who heads the dealership of a motorcycle brand in the city, said a lower footfall is expected this season at retail stores.
“Costs of motorcycles have increased by 3% and sales have fallen by about 15% in the city and up to 35% in the neighbouring regions,” said Sheth.
Those looking out to buy new electronic and other consumer products will also have to shell out a lot more money to make their purchases.
“Ever since the depreciation of the rupee, the cost of electronic products has been increasing every month by about 5% to 10%,” said Sadashiv Shetty, who is the proprietor of Highway Electronics that is located in Bandra.
“This year, we are expecting the sales during the festive season to be lower by 20% than the sales during the festive season 2012,” Shetty said.
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