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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 Win: A Shift Towards Leftist Politics

Updated: Oct 22, 2024

Dissanayake’s Win

Anura Kumara Dissanayake, the left-leaning candidate from the National People’s Power (NPP), decisively won against his primary opposition. The new president, a former trade union leader with an anti-elite stance, campaigned on promises of economic equality, greater state control over resources, and curbing foreign debt dependency. His socialist ideology emphasised nationalising key industries, fostering social welfare programmes, and limiting foreign influence—particularly that of Western nations.

The main contenders in this election included Ranil Wickremesinghe, the incumbent president from the United National Party (UNP), and Sajith Premadasa, the leader of the centre-right Samagi Jana Balawegaya (SJB). Despite fierce competition, Dissanayake’s promise of economic reform and critique of the 2022 economic crisis resonated with the electorate, who are still reeling from the economic shocks. Voter concerns centred on the unresolved debt crisis, unemployment, inflation, and the high cost of living, which dominated the election discourse.

Sri Lanka’s presidential elections have historically been a battleground for competing ideologies and foreign interests. Since gaining independence in 1948, the country has oscillated between socialist-leaning policies and pro-market, right-wing governance. Presidents like Chandrika Kumaratunga and Mahinda Rajapaksa advocated for greater state control, while more recent leaders, including Ranil Wickremesinghe, sought to liberalise the economy. Behind these political shifts is a geopolitical landscape where India and China vie for influence.


Influence of India and China

India has always been a key player in Sri Lanka, due to its geographical proximity and shared cultural heritage. However, China’s involvement has grown in recent years, driven by its Belt and Road Initiative (BRI). Sri Lanka’s strategically located ports, especially Hambantota, have made this island nation a focal point of China’s maritime ambitions. This dynamic has created a delicate balancing act for previous Sri Lankan presidents, requiring them to navigate the competing interests of these two Asian giants.

Economic Crisis and Survival

The so-called Chinese “debt trap” became a major issue during Mahinda Rajapaksa’s presidency. The country borrowed heavily from China to finance infrastructure projects, including the infamous Hambantota Port. These loans, with high interest rates, quickly became unsustainable.

By 2022, Sri Lanka faced an economic meltdown triggered by a foreign exchange crisis and exacerbated by the global pandemic. The country defaulted on its foreign debt for the first time in its history, leading to severe shortages of essential goods, widespread protests, and the resignation of President Gotabaya Rajapaksa.

Sri Lanka managed to recover through a combination of International Monetary Fund (IMF) assistance, temporary relief from creditors, and austerity measures. Yet, the scars of that crisis remain, and the recent election has highlighted lingering discontent among the population, especially over the perception that foreign influence was a key contributor to the economic collapse.


Impact on Indo-Lankan Relations

The election of Anura Kumara Dissanayake could significantly alter Indo-Lankan relations. India, which had strengthened ties with the previous government through economic support and strategic collaborations, may now face renewed competition from China. With Dissanayake’s commitment to reducing reliance on Western and multilateral institutions like the IMF, there are growing concerns that he may lean heavily on China for future financial and infrastructure support. This shift could reintroduce the risks of economic entanglement and sovereignty loss that Sri Lanka faced under the previous Rajapaksa administration.

From India’s perspective, the recent election has created new diplomatic challenges, coinciding with increasing hostility from most other neighbouring countries like Pakistan, China, Nepal, Bangladesh, and the Maldives. Once seen as a potential ally, Sri Lanka may now tilt towards Chinese influence, leaving India diplomatically isolated in the region, with Bhutan remaining its only ally. Given the current situation, it is crucial for the Government of India to focus more on its neighbours. An India surrounded by hostile neighbours will always be at risk, and these risks will escalate as India becomes stronger economically and militarily.


Cautious Optimism for the Future

While it’s too early to make definitive judgements on the trajectory of Sri Lanka’s foreign and domestic policies under the new president, signs indicate Sri Lanka may be heading towards another phase of Chinese influence. However, given the disastrous consequences of previous involvement in China’s debt trap, the new government should tread carefully.

India, for its part, must remain watchful and proactive and continue to focus on diplomatic engagement, economic assistance, and strengthening cultural ties with Sri Lanka to counterbalance China’s financial allure. At the same time, India must recognise the changing political winds and prepare for a future where its neighbours may not always be aligned with its strategic goals. The outcome of this election serves as a reminder that regional stability is fragile, and India’s role in South Asia has never been more crucial.

As Sri Lanka embarks on this new political chapter, the world is watching it closely and cautiously.

(The writer is an IT professional. Views personal.)

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