Hard to beat festive cheer of spenders

I just met an old friend of mine last week who also happens to be the head of a top tractor company in India. It's always good to catch up with friends, especially if it is after a long time. However, this time it was even better.

By the time our conversation ended, I felt quite reassured and positive about the country's current state of affairs.

The reassurance came from him when he told me how this year's benevolent monsoon has been a blessing for farmers and will give good returns in turn, making rural consumption go up. Consequently, the sale of durables, personal care will do well in smaller towns.

In urban areas, while the upper middle class and high-income groups have a lot of doubts about investing in the markets, they too, have little apprehension about spending.

True, that we are not what we used to be sometime back, true that our economy is limping and the dollar has soared up, true that our growth has fallen to a 10-year low of five per cent. But there's another truth that exists.

The Reserve Bank of India governor has changed and Raghuram Rajan is already in talks with the government to induct some fresh young faces into the RBI board. Tata is getting into the country's struggling airlines industry. The price of petrol has gone down by Rs 3.6/litre. The monsoon this year has been great for parts of the country's agricultural land.

I certainly choose to see the positive side of it. Investments may slow down but the festive-quarter consumption will do well. Real estate, finance, luxury may not do well this festive season but the other sectors will. All in all, the sentiment of foreign investors may be negated by consumption during the festive season. But that's not the only reason to smile.

Following the festive season will be the election season, which will trigger lots of consumption. The election expenditure will result in an upward demand.

So, this festive season, the slowdown won't affect, poor Sensex sentiments won't affect (rural consumers) but what will have an impact are good crops and good returns. And, this would spur more consumption.

The author is national creative director, Leo Burnett