India's Festival Economy
Bonuses, Festive Credit and Offers
How Diwali bonuses, festival advances and cheap festive loans fund holiday spending, and the risks of overspending with easy credit.
Festive spending is often funded by bonuses and credit.
Bonuses
- The Payment of Bonus Act, 1965 requires many employers to pay an annual bonus, often before Diwali.
- Government employees receive festival advances.
Festive credit
- Banks and NBFCs offer festive loan offers: lower rates and processing fee waivers.
- No-cost EMI offers on phones and appliances.
- Buy now, pay later grows in festive seasons.
No-cost EMI
The interest cost is often built into the price or paid by brands; it’s not always truly free.
Risks
- Overspending leading to debt.
- Credit card bills after the season.
Economic effect
Credit boosts demand in the short term but must be repaid later.
Tips
Budget festival spending and avoid high-interest debt.
The no-cost EMI
A shopper buys a TV on a no-cost EMI but later finds the upfront discount was smaller than for cash buyers, meaning interest was built in.
Thinking no-cost EMI is always free
Costs can be built into the price.
Key takeaways
- Bonuses often come before Diwali under the 1965 Act.
- Festive loan offers and no-cost EMIs boost spending.
- No-cost EMI may hide costs.
- Credit brings overspending risks.
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