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Slowdown may be there and experts are making hue and cry about liquidity crunch and urging government to step in decisively. But this clearly failed to dent the Diwali sales. Consumer durable companies have clocked impressive increase in their revenues in the months of September and October.

Sony, Samsung, LG, Godrej, Whirlpool, Phillips all made good revenues during these two months. Sony and LG have posted sales growth of over 50 percent, while Whirlpool has managed 23 percent growth and Samsung 35 percent. Godrej Consumer Appliances clocked 40 percent increase in sales growth in the said period. Pantaloon, through its value retail formats – Big Bazaar ad Food Bazaar – has clocked a whopping 87 percent growth in sales in the Diwali season.

The company executives are attributing reasons for this increase in sales to an increased expenditure on the advertising and branding front despite slowdown.

               But does this not reveal a larger picture?

Questions were raised about the propensity of the common people to spend this season. There were hardly any discounts on offer this Diwali as in normally the case every year. People still went on shopping spree.

This probably indicates fundamentals in India are still strong and the current slowdown in India to a great extent is more a result of negative sentiments spread by a far too enthusiastic media. Slowdown came to India before it actually should have hit had negative sentiments not been spread thick and fast by media and many so-called ‘experts’. This is testified by CMIE (Centre for Monitoring Indian Economy) MD & CEO Mahesh Vyas in an interview to television channels. Unfortunately, such 'positive' interviews are rare, and hardly appear in print, web or television. After all, negative news sell!

One must not be overwhelmed by the bearish trends in the stock markets. The markets have been falling mainly because FIIs (Foreign Institutional Investors) were selling their assets here to meet their obligations back home. Stock markets in India are more integrated into global economy than the real economy of India is. And, one must also be very clear in mind that India is not an export-oriented economy like China or Japan. Indian economy is driven largely by domestic demand. So news items highlighting a downtrend in these two sectors will have minimal impact on the larger economy as such.

One should also make a clear distinction between contraction and slowdown. American, Japanese and Euro-area economies are contracting, but Indian economy is facing slowdown, and this is aggravated because of these contractions. Expected growth rate (in 2008-09) of 7.5-7.9 percent is still fair enough and more than what India used to clock just five years ago.

India can tide over this slowdown far more easily by accelerating massive investments in infrastructure projects – roads, ports, airports, and low and middle cost housing. So far Indian government has refrained itself from direct intervention. But this is exactly what the CEOs and MDs of mega companies of India want the government to do. The government, on the other hand, is letting the industries is giving indirect supports only through rate cuts and trying to revive positive sentiments across the section – consumers as well as manufacturers and service providers. This is going to be a learning curve for all and India should emerge out of this situation a more matured economy.