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Correspondent

23 August 2024 at 4:29:04 pm

Festive Surge

India’s bazaars have glittered this Diwali with the unmistakable glow of consumer confidence. The country’s festive sales crossed a staggering Rs. 6 lakh crore with goods alone accounting for Rs. 5.4 lakh crore and services contributing Rs. 65,000 crore. More remarkable still, the bulk of this spending flowed through India’s traditional markets rather than e-commerce platforms. After years of economic caution and digital dominance, Indians are once again shopping in person and buying local....

Festive Surge

India’s bazaars have glittered this Diwali with the unmistakable glow of consumer confidence. The country’s festive sales crossed a staggering Rs. 6 lakh crore with goods alone accounting for Rs. 5.4 lakh crore and services contributing Rs. 65,000 crore. More remarkable still, the bulk of this spending flowed through India’s traditional markets rather than e-commerce platforms. After years of economic caution and digital dominance, Indians are once again shopping in person and buying local. This reversal owes much to policy. The recent rationalisation of the Goods and Services Tax (GST) which trimmed rates across categories from garments to home furnishings, has given consumption a timely push. Finance Minister Nirmala Sitharaman’s September rate cuts, combined with income tax relief and easing interest rates, have strengthened household budgets just as inflation softened. The middle class, long squeezed between rising costs and stagnant wages, has found reason to spend again. Retailers report that shoppers filled their bags with everything from lab-grown diamonds and casual wear to consumer durables and décor, blurring the line between necessity and indulgence. The effect has been broad-based. According to Crisil Ratings, 40 organised apparel retailers, who together generate roughly a third of the sector’s revenue, could see growth of 13–14 percent this financial year, aided by a 200-basis-point bump from GST cuts alone. Small traders too have flourished. The Confederation of All India Traders (CAIT) estimates that 85 percent of total festive trade came from non-corporate and traditional markets, a robust comeback for brick-and-mortar retail that had been under siege from online rivals. This surge signals a subtle but significant cultural shift. The “Vocal for Local” and “Swadeshi Diwali” campaigns struck a patriotic chord, with consumers reportedly preferring Indian-made products to imported ones. Demand for Chinese goods fell sharply, while sales of Indian-manufactured products rose by a quarter over last year. For the first time in years, “buying Indian” has become both an act of economic participation and of national pride. The sectoral spread of this boom underlines its breadth. Groceries and fast-moving consumer goods accounted for 12 percent of the total, gold and jewellery 10 percent, and electronics 8 percent. Even traditionally modest categories like home furnishings, décor and confectionery recorded double-digit growth. In the smaller towns that anchor India’s consumption story, traders say stable prices and improved affordability kept registers ringing late into the festive weekend. Yet, much of this buoyancy rests on a fragile equilibrium. Inflation remains contained, and interest rates have been eased, but both could tighten again. Sustaining this spurt will require continued fiscal prudence and regulatory clarity, especially as digital commerce continues to expand its reach. Yet for now, the signs are auspicious. After years of subdued demand and inflationary unease, India’s shoppers appear to have rediscovered their appetite for consumption and their faith in domestic enterprise. The result is not only a record-breaking Diwali, but a reaffirmation of the local marketplace as the heartbeat of India’s economy.

Dissanayake’s Landslide and What it Means for India

Updated: Nov 18, 2024

Dissanayake’s

In a decisive victory that surprised few, Sri Lanka’s National People’s Power (NPP) party, led by President Anura Kumara Dissanayake, achieved a landslide win in the country’s parliamentary snap elections on Friday. According to the Sri Lankan Election Commission, the leftist coalition secured 123 of the 225 seats in the Assembly, a resounding endorsement of Dissanayake’s call for a re-election. This success, coming just months after Dissanayake’s presidential victory in November, solidifies his position as the leader of a new political era in Sri Lanka, characterized by his promise to break from the country’s long-standing dynastic politics and corruption.


Dissanayake’s victory ends the Rajapaksa family’s political dominance, following a financial crisis triggered by Gotabaya Rajapaksa’s mismanagement. His anti-corruption and economic reform platform resonated with a public disillusioned by the Rajapaksas’ corruption and ties to China. His win signals a broader shift in Sri Lanka’s governance, foreign policy, and economic direction.


The Rajapaksa family’s dominance in Sri Lankan politics dates back to the 1940s, when D. A. Rajapaksa, a prominent southern politician, first entered the public sphere. Over time, the family grew into one of the wealthiest and most powerful political dynasties in the country. Mahinda Rajapaksa, Gotabaya’s brother, served as president from 2005 to 2015, overseeing the final years of Sri Lanka’s brutal civil war and the defeat of the Tamil Tigers (LTTE). Despite his popularity for ending the civil war, Mahinda’s time in office saw a significant expansion of Sri Lanka’s debt, much of it tied to infrastructure projects that critics argue were both wasteful and mismanaged.


Gotabaya Rajapaksa, who succeeded Mahinda as president in 2019, inherited this legacy of cronyism, compounded by a series of policy blunders that led to the country’s economic collapse. Sri Lanka’s increasing reliance on Chinese loans for massive infrastructure projects like the controversial Hambantota port, leased to a Chinese firm, was seen as a threat to India’s strategic interests. The Rajapaksas’ cozy relationship with Beijing, combined with their domestic mismanagement, led to widespread discontent, culminating in mass protests in 2022, dubbed ‘Aragalaya’ (the People’s Struggle).


After Gotabaya’s ousting and exile in July 2022, Ranil Wickremasinghe became president but failed to distance himself from the Rajapaksas or restore economic stability, weakening public trust. Dissanayake, a vocal critic of the Rajapaksas, emerged as the opposition leader, gaining prominence with his reformist, anti-corruption platform and pragmatic approach, which resonated with a wide electorate.


Born into humble beginnings in 1968 in Galewela, a small town in central Sri Lanka, Anura Kumara Dissanayake’s journey into politics was shaped by his early experiences with social inequality and injustice. His father was an agricultural worker who later joined the Surveyor’s Department, and young Dissanayake was acutely aware of the disparities between the wealthy elite and the working class. His political activism began during his university days, when he joined the Socialist Students Union (SSU), a left-wing student group aligned with the Janatha Vimukthi Peramuna (JVP), a Marxist-Leninist party.


Dissanayake’s rise within the JVP was meteoric. He quickly became involved in the party’s central leadership and served as its National Organizer, later joining the JVP’s Politburo. The JVP, founded in 1965, has a tumultuous history, marked by violent uprisings in 1971 and 1987-89, which saw thousands of youth activists killed or ‘disappeared.’ Dissanayake, however, distanced himself from the more radical elements of the party, instead focusing on building grassroots support among the country’s poor and disenfranchised.


Dissanayake was elected to Parliament in 2000 and served in various roles, including Minister of Agriculture, Livestock, Land, and Irrigation from 2004 to 2005, focusing on rural development and poverty alleviation. Over time, he developed a political philosophy centered on resource redistribution, transparency and dismantling corrupt political dynasties. His leadership of the JVP from 2014 further cemented his influence in Sri Lanka’s political landscape.


Dissanayake’s presidential campaign in 2019, although unsuccessful, marked a significant turning point in his political career. He secured third place, but his message of clean governance and national renewal resonated with a growing number of voters disillusioned with the political status quo. His presidential victory now is testament to his sustained efforts to reach out to both the urban educated population and the rural poor by promising to rebuild Sri Lanka on the foundations of justice, transparency and accountability.


Dissanayake’s administration faces enormous challenges. The economic crisis that triggered mass protests in 2022 is far from over. Sri Lanka’s foreign debt remains crippling, and inflation continues to soar, exacerbating food and fuel shortages. The country’s reliance on imports, coupled with a lack of foreign exchange reserves, leaves it vulnerable to further economic shocks. While the International Monetary Fund (IMF) has provided a bailout package, the country needs a comprehensive economic strategy that goes beyond short-term stabilization.


Dissanayake has vowed to prioritize economic reforms, focusing on fiscal discipline, reducing corruption, and attracting foreign investment. His administration is likely to seek further support from international partners, including India, which has already provided significant assistance to Sri Lanka during the crisis. Since 2020, India has extended more than USD 3.8 billion in aid, including a line of credit for petroleum imports, a currency swap to bolster Sri Lanka’s foreign reserves, and export credit facilities for essential commodities.


Dissanayake’s political strategy is also likely to include a focus on social welfare, education, and healthcare, sectors that have been neglected under previous administrations. His appeal to the youth, the unemployed, and the rural poor is likely to continue as he pushes for reforms that benefit those who have been left behind by the old political elites.


India has long viewed Sri Lanka as a vital partner in the region, not just for economic reasons but also for strategic considerations. Sri Lanka’s location in the Indian Ocean, along key maritime trade routes, makes it an important player in India’s security calculus.


Under the Rajapaksas, Sri Lanka’s growing ties with China were a source of concern for India. China’s investments in infrastructure projects, particularly in the Hambantota port, were seen as a direct challenge to India’s influence in the region. However, Dissanayake’s rise offers an opportunity for India to reset its relations with Sri Lanka, particularly if the new government moves away from China’s economic and strategic orbit.


Dissanayake has expressed interest in balancing Sri Lanka’s relationships with both India and China, but his focus on economic reforms and anti-corruption will likely mean a reassessment of the Rajapaksas’ policies. India’s strategic concerns over Sri Lanka’s proximity to China, especially in the context of maritime security, are likely to feature prominently in any future diplomatic engagement.


India has expressed its readiness to support Dissanayake’s government, having already provided significant aid during the crisis. The two countries share strong historical and cultural ties, particularly through Buddhism, and have collaborated on initiatives like restoring Buddhist heritage sites and promoting Buddhist tourism. This shared heritage lays a solid foundation for strengthening ties under Dissanayake’s leadership.


For India, Dissanayake’s presidency presents both opportunities and risks. By engaging with Sri Lanka strategically, India can help ensure that the island nation emerges from its crisis in a way that strengthens regional stability and fosters deeper cooperation between the two neighbours.


As Dissanayake begins his presidency, Sri Lanka faces an uncertain future, but it also holds the promise of change. The country’s recovery will require patience, pragmatism, and bold leadership - a challenge that Dissanayake is poised to meet. For India, the road ahead will be one of cautious optimism, as it navigates the evolving dynamics of the region and seeks to maintain its influence over the strategic island off its southern coast.

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