Festival Fortunes: Impact on Economy

By: Anisha Gupta

Indian festivals like Diwali, Holi, and Pongal are vital economic drivers, boosting sectors like retail, e-commerce, and tourism. Beyond their cultural significance, they significantly impact domestic and global markets, driving consumer spending, increasing exports, and supporting small businesses and artisans.

In January 2024, festivals like Makar Sankranti, Pongal, and Lohri were celebrated in different parts of India for the commencement of harvest season. These agricultural-season-based festivals not only relate to religion or culture but also play their role as economic drivers. With the involvement of millions of people across the country in celebrations, the ripple effects on economics became evident: it is festivals that boost the economy of India and the world at large. 

India is a land of rich cultural diversity, which is very well expressed through its various festivals. Starting from Diwali, Eid, Christmas, and Guru Nanak Jayanti to Holi, Navratri, and Durga Puja, each festival celebrated across the length and breadth of the country has its own identity and way of observance. All festivals are celebrated by different communities that comprise specific rituals, customs, and traditions that seem to have been handed down through generations. It is more than religious festivals; they reflect India's cultural unity in diversity. It can represent a huge economic activity during the festive celebrations, starting from the selling of festival-related items like garments, decorative items, sweets, and gifting items to the holding of events and fairs on large scales. Such seasonally driven economic activity benefits various sectors like retail, hospitality, tourism, and e-commerce immensely. 

Festivals in India act definitely as a shot in the arm for the economy—particularly in the retail, tourism, and hospitality sectors. During the festive season, consumer spending goes through the roof with people on a spending spree for new clothes, gifts, items for their homes, travel, and other amusements. According to a report by the Confederation of Indian Industry, the Diwali season on its own could contribute up to 30 percent of annual sales for the retail sector. Diwali shopping this year has rung up a record sale of nearly ₹3.75 lakh crore, a figure that speaks volumes about the economic vitality that festivals bring in.  

These festivals also lead to a massive surge in e-commerce platforms, where biggies like Amazon and Flipkart provide extensive sales and discounts. For instance, during the festive season in the calendar year 2023, e-commerce sales also reflected an increase in numbers. This surge in online shopping would not be limited to urban areas; instead, it has penetrated both urban and rural markets, underpinning the expansive reach of digital platforms during festivals. 

Festivals also help the tourism sector greatly. Both domestic and international tourists visit India during big festivals like Diwali, Holi, and Durga Puja, contributing much to the economy. According to the Ministry of Tourism, West Bengal accounted for 4.88% of total India’s tourism, which has generated decent revenue in both the hospitality and travel sectors. The festivals of India are not just confined to the country; instead, their impact goes across the border. The global diaspora celebrates the festivals, and this demand reverberates back in the demand for Indian goods and services. Traditional Indian goods, especially textiles, sweets, and handicraft items, note a rising increase in exports during festive seasons. In the Diwali season of 2023, exports of traditional goods increased by 6.2% (3.75 Lakh Crore in total) as compared to the same period last year, thanks to the prevalent demand from countries like the United States, the United Kingdom, and the United Arab Emirates.  

Excluding India, the list of cities goes on to include London, New York, and Dubai celebrating Diwali and Holi with great pomp and fanfare. This holds a lot of power to attract international tourists, boost local economies, and propel Indian culture globally. The trends of Indian festivals abroad are growing not only to help export markets for Indian businesses but also to increase global trade.  

Beyond the immediate financial impact, festivals are of crucial importance to the socio-economic fabric of India. It encourages community bonding, reinforces social values, and gives a sense of continuity and belonging in an increasingly globalized world. Economic activities relating to festivals generate employment opportunities, especially in rural areas where production related to traditional goods and crafts is located. 

Furthermore, festivals support the informal economy of small vendors, artisans, and temporary workers who depend upon seasonal demand. This increase in economic activity sustains these groups with enough earning opportunities to help continue their livelihoods and avoid poverty. 

Festivals in India are much more than cultural celebrations; rather, they are the economic powerhouses behind significant economic activities at home and across borders. With India emerging further as an economic giant across the international scene, so will the role that its festivals play in the formation of its economic trends. From consumer spending and boosting small businesses to global trade and cultural diplomacy, the impact of Indian festivals is very far-reaching and, hence, intrinsic to the economic landscape. The spread of these festivities will have a never-ending surge upward in an increasingly interwoven world, both in cultural richness and economic vivacity.