Page last updated at 23:01 GMT, Wednesday, 7 October 2009 00:01 UK

Wealthy Indians eye austerity image

By Shilpa Kannan
India Business Report, BBC World News, Delhi

The Sarkar family is still spending, only less than they previously.
The Sarkar family is still spending, only less than they previously.

Bureaucrats are flying economy class instead of business, and some top politicians even take the train instead of travelling by plane.

This is an austerity drive, Indian style.

To combat rising costs and the financial slowdown, the country's ruling party has ordered its members to cut costs.

The drive started at the top with Sonia Gandhi, the president of the governing Congress party, using a commercial airliner to fly to a party rally in Mumbai.

Foreign Minister SM Krishna and his deputy Shashi Tharoor, who were living in five star hotels, were asked to move into government guest houses.

Spending cut

This drive to cut expenses has been launched to keep the ruling party more in synch with the economic difficulties caused by the severe drought in the country.

India is suffering its worst drought since 1972 and that directly affects the agriculture sector, which is the country's largest employer.

Now this need to be seen as austere is catching on among urban Indians.

Sales of gold jewellery traditionally peaks this time a year.
Sales of gold jewellery traditionally peaks this time a year.

Take Chitrata Sarkar, 38, a lecturer from Delhi.

This time of the year is normally when she spends the most.

The 10-day-long Durga Pooja is the biggest festival of the year for her family.

Usually that means the Sarkar family buying innumerable gifts, not just for themselves, but for members of the extended family, friends and neighbours as well.

Admiring their new possessions, Chitarata and her mother sit in their living room surrounded by bags of new clothes, jewellery, bags, shoes and other accessories.

But this is less than half of what would normally be bought, Chitrata says.

"I normally buy a new saree for every day of the festival," she says.

"People look at you to see whether you are wearing new clothes and new jewellery, there is so much peer pressure, but this year has been different.

"This year I tried to curtail my purchases so I have got half the number."

Subtle purchases

In an upmarket hotel in central Delhi, the government-run Metals and Mineral Trading Corporation organises a sale of gold ornaments every year.

Different states of India bring their traditional designs of necklaces, bracelets and any other form of gold that can be given as gifts.

Bridal wear is not as flamboyant as it was during the economic boom.
Bridal wear is not as flamboyant as it was during the economic boom.

Sales of gold jewellery are traditionally at their peak this time a year. In recent years, people would crowd around the stalls, hoping to get the best deals, but this time the sale has been less popular.

Traditionally, more than 95% of gold bought in India is in the form of jewellery.

But at his year's sale, it seems many were instead looking to buy gold in the form of coins and bars or biscuits.

Government worker Mukesh Tyagi, 55, is one of them. He and his wife have come to buy a $3,500 gold bar weighing 100 grams.

"My wife normally buys gold bangles or designer chains, but this year we want something more subtle," he says as his wife picks up their precious purchase, which is smaller than a bar of soap.

"We don't want to show our neighbours and friends that we are spending in times of a financial slowdown around the world.

"This is so tiny that we'll just keep it in our safe as an investment. She'll just wear her old jewellery for the festival this year."

Hidden wealth

But although many families are buying less gold, there is plenty stashed away in many homes.

The cost may actually be the same, but the look is definitely more subtle
Bridal wear designer Ritu Kumar

According to one estimate, Indian family vaults have almost 15,000 tonnes of gold locked away, a volume comparable to the stockpile held by the US Federal Reserve.

The fact that there are still plenty of people with plenty of money out there is clear for anyone operating in India's often lucrative wedding industry.

Nobody seems willing to cut spending related to marriages, according to chocolatier Geetanjali Achhra who runs Cocoa World, a wedding chocolate specialist.

"Indians cannot hold back," she says. "During weddings they don't like to save at all, they only spend, spend and spend."

Echoing her sentiments is Radha Talwar, who is organising her son's wedding.

She says she plans to spend extensively on cocktails and multiple parties, as well as on flights and hotels for all her guests.

"I want to give my guests the best time of their lives," she says.

"I won't hold back on anything. I have saved and put aside money for this occasion so there is no question of cutting back."

Superficial restraint

So wedding budgets remain large, yet fashion has changed to reflect the nation's new mood.

Bridal wear designer Ritu Kumar says people have cut back on bright colours and bling.

Making sweets for the whole community is part of celebrations.
Making sweets for the whole community is part of celebrations.

"Most of my clients want simpler-looking outfits over something which is bright and has a lot of shiny stones in it," she says.

"The cost may actually be the same, but the look is definitely more subtle and not in-your-face expensive.

"The community in general is fairly conservative when it comes to weddings. Over the last couple of years, the conspicuousness in society had pushed bridal fashion to something flashy and over the top , but we are now going back to classics."

Back with the Sarkar family, the women from the neighbourhood gather to make sweets.

Rolling little balls of coconut and cream in sugar, they are piling up sweets by the hundreds for the whole community.

Despite the rising commodity costs, the sweets are one thing that have not been scaled down.

This time many seem to have switched from conspicuous consumption to conspicuous cutbacks.

Beyond the facade, it is increasingly clear that among the wealthy, the restraint is skin deep.



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