Union finance Minister Nirmala Sitharaman on Monday announced two schemes for central government employees that are expected to spur festive season demand for household items such as televisions, water coolers, food grinders, vacuum cleaners, immersion heaters, hair dryers and irons.
The government has offered a ₹10,000 special festival advance as well as a leave travel concession (LTC) cash voucher scheme that can be used to buy items that attract goods and services tax (GST) of 12% or more.
“The items that come under this category are usually goods that families buy ahead of the festive season,” Sitharaman said at a press conference.
India is in the midst of a festive season that began with Onam and will end with Diwali in November. Companies are pinning hopes on shoppers returning to their stores during this period. However, the pandemic, dent on household incomes and the unrelated uncertainty has dented consumer confidence.
“Definitely the spending should increase—from both the ₹10,000 festive advance and the LTC cash voucher scheme, especially for our categories of goods. All our categories attract GST of 12% or more. This puts more money in the hands of consumers. It is a very positive move,” said Nilesh Gupta, managing director at electronics retailer Vijay Sales, which runs large format stores selling television sets, refrigerators, washing machines, and laptops. The move is well-timed and could aid the household electronics categories, he said.
The fiscal stimulus is a welcome move as it will give extra disposable income to individuals, boost expenditure, and help the consumer durables industry drive additional sales in the festive season, said Manish Sharma, president and chief executive, Panasonic India & SA, that sells refrigerators, air conditioners, washing machines and televisions. The consumer durables industry lost close to a quarter of its overall business due to the lockdowns in the early part of this year.
“We are hopeful of recovering a significant part of that in this festive season. The announcement will give a boost to consumer spending and bring in revival in sales,” Sharma said.
White goods and appliances manufacturers agreed that these schemes will spur demand and push consumers to buy items that offer convenience. “We see an increase in demand for consumer durables and appliances that make every day living seamless, efficient, and more comfortable for the consumers. We are optimistic that such initiatives by the government along with the push towards creating a robust infrastructure will further our economic recovery in the coming months,” said Anil Rai Gupta, chairman and managing director, Havells India Limited.