Despite a series of reform measures adopted by the government to boost business sentiment in India, the corporate India has cut “gift budget” by 50% this Diwali making thereby, the festival season faint for aspiring gift receivers.
A survey conducted by the industry body the Associated Chambers of Commerce and Industry of India (Assocham) said, “India Inc is severely cutting back its corporate gift budgets this Diwali by a whopping 45-50% as costs balloon and earnings together with profit margins shrink by the day.
Assocham carried out a survey during the month of October under the aegis of its Assocham Social Development Foundation (ASDF) to ascertain the ‘Diwali Gifting Intentions of India Inc.’
The assumed significance considering India Inc’s spend over Rs 2,000 crore on Diwali gifts in 2009, according to rough estimates by Assocham, the corporates had increased their gift budget by an astounding 60% in 2010 as the estimates reached to Rs 3,200 crore according to the industry body.
Apparently, according to an Assocham survey conducted last year around Diwali to ascertain the sentiments of India Inc vis-à-vis corporate gifting, corporates had reportedly trimmed their budgets by about 25-30%, while this year they have gone ahead and slashed it by almost 50%.
Its representatives interacted with about 150 different companies with an employee strength of 500 and plus operating in the domains of pharma, BFSI (Banking, Financial Services and Insurance), auto, hospitality, FMCG, manufacturing, energy and infrastructure sectors in 10 cities – Ahmedabad, Bangalore, Chennai, Delhi-NCR, Hyderabad, Jaipur, Kolkata, Lucknow, Mumbai and Pune.
“Diwali apart from being India’s most celebrated festival is a wonderful opportunity for the corporates to express their gratitude and cement their ties with their respective employees, associates and clients,” said ASSOCHAM secretary general, D S Rawat while releasing the findings of the chamber’s survey.
“But just like the last year, this year too the business houses are bracing for a muted Diwali affair evidently as majority of respondents of ASSOCHAM survey have tightened their purse strings and have slashed their budgets for Diwali gifts significantly,” said Rawat.
Of the 150 companies interviewed, about 30 of them said they have decided to entirely do away with gifting concept this year and would use the extra funds to better use, highlights the Assocham survey.
While about 90 respondents i.e. the majority of the total of those interviewed said they are going to spend less on gifts for their corporate connections this year and have drastically scaled down their budgets by about 45-50% in this regard.
Many of these even said that although they have no interest to indulge in such expenses, but they have to go ahead with it just because it has become an annual tradition of sorts and thus can’t be avoided.
Corporates blamed the prevailing economic slowdown both in India and abroad together with decelerating industrial growth leading to an upward spiraling inflation, high cost of credit, dropping operating profits and difficult trading conditions for going slow this festive season.
Of the remaining, about 12 respondents said their company has shortlisted very selective list of clients to whom they would distribute personalized gifts to show their appreciation and make them feel valued.
Digital cameras, branded watches, pens, wallets, affordable tablet computers, chocolates and sweets gift hampers and smart phones have replaced the large dry fruit packs, luxury gift items, gold coins, according to the Assocham survey.
To do a reality check in this behalf, Assocham representatives even interacted with dry-fruit traders in Khari Baoli area of Delhi, one of the largest spice and dry fruit market. Of about 40 of shops surveyed here, almost all of the respondents said their Diwali business has never been this dull as corporate orders have nose-dived by about 75-80%.
It was also ascertained that prices of dry fruits have gone up by almost 20-25% this Diwali. Retail gift wrapping industry are also likely to feel the heat as gift sales suffer this Diwali. Many company representatives even said they have deferred their plans for holding an annual Diwali party for their employees and are not distributing any festive bonus whatsoever owing to a weak business performance.