Economic impact of Holi on local businesses: Which sectors benefited the most; What products were most in demand; Find out here

Holi is expected to stimulate economic activities, particularly benefiting local businesses, the MSME sector, and the broader economy and prove to be a boon for traders and retailers, said a report by Angle One. The surge in consumer spending became evident across various segments, especially in the sales of traditional Indian goods such as herbal gulals, water guns, balloons, chandan (sandalwood powder), and dress materials. The range of goods experiencing a spike in sales during Holi is not limited to traditional items. There’s a remarkable demand for sweets, dry fruits, gift items, textiles, flowers, FMCG products, consumer durables, and pooja materials. This diversified demand spectrum promises a robust period ahead for the trade industry, said Confederation of All India Traders (CAIT). This year’s Holi festival, per CAIT data, is expected to generate business worth over Rs 50,000 crore for traders, up by nearly 50 per cent from the previous year.

In 2022, Holi created a business turnover of approximately Rs 25,000 crore, marking a 25 per cent increase from the previous year. 

Consumer Spending and Retail Sales: The weeks leading up to Holi witness a significant uptick in consumer spending as people flock to markets to purchase colours, water balloons, sweets, and traditional attire. Retailers see an increased footfall, with festive merchandise businesses experiencing a notable boost in sales.

Tourism and Hospitality Industry: Holi also provides a significant boost to the travel and hospitality sector. Hotels, guesthouses, and travel operators offer special Holi packages, attracting tourists from within the country and abroad. This influx of tourists benefits local economies, as it increases demand for accommodation, food, and transportation services, stated Angel One in its report. 

Textile and Fashion Sectors: The festival also influences fashion trends, with a noticeable increase in the sale of white and light-coloured attire. Local textile shops, boutiques, and online retailers stock up on Holi-themed clothing, catering to the demand for such apparel. 

Food and Beverage Sector: The demand for Holi-specific sweets, snacks, and festive foods escalates, benefiting local sweet shops, bakeries, and restaurants. 

Chemical and Colour Industry: The production and sale of colours, water guns, and related items see a spike, contributing significantly to the chemical and colour industry. Manufacturers ramp up production to meet the increased demand, leading to higher sales figures, the report said.

Entertainment and Events Management: The organization of Holi parties and events has become a lucrative business. Event management companies and local clubs organize special Holi events featuring music, dance, and color play, attracting thousands of participants. “These events require significant planning and resources, including venue booking, security arrangements, and entertainment, generating employment and business opportunities for local vendors and service providers,” it said.

E-commerce and Online Retail: The digital revolution has transformed festival shopping, with e-commerce platforms experiencing a surge in sales. 

Challenges and Considerations

Environmental and Health Concerns: While Holi generates considerable economic activity, it poses environmental and health challenges. Synthetic colours have been a concern due to their harmful effects on health and the environment. This has necessitated a shift towards organic colours, which, while beneficial, also require local businesses to adapt their production processes and sourcing of raw materials. The festival’s water usage is another concern, especially in water scarcity regions.

Managing Seasonal Demand: For many businesses, the brokerage firm added, the surge in demand around Holi is a double-edged sword. While it presents an opportunity for increased sales, managing this seasonal demand can be challenging.