'SIP @ ₹5,000/month? Too much': Ahead of Diwali, CA decodes middle-class Indians' spending habits

With Diwali around the corner, conversations on social media have turned to how Indians spend during the festive season. A post by Chartered Accountant Nitin Kaushik has gone viral for highlighting the contrast between emotional festive spending and reluctance toward disciplined investing.

Kaushik illustrated a typical middle-class family’s October expenses: ₹50,000 on Diwali shopping, ₹1 lakh on gold jewellery, and ₹25,000 on gifts and parties — a total of ₹1.75 lakh in a single month. Yet, he pointed out, the same families often hesitate to commit ₹5,000 a month to a Systematic Investment Plan (SIP).

He explained that a ₹5,000 monthly SIP, invested over 10 years at a 12% annual return, could grow to around ₹6 lakh — a stark contrast to how quickly festive spending disappears.

“Emotions run high, logic runs low during festivals,” Kaushik wrote, urging people to “mind their money before their heart spends it.”

According to the Confederation of All India Traders (CAIT), Diwali sales are projected to hit a record ₹4.75 lakh crore this year, driven largely by Indian-made products. A CAIT survey of trade associations in 35 cities found that the Prime Minister’s Swadeshi call and recent GST cuts are key drivers of this surge.

“The recent massive GST rate cut, which has come as a festive gift for both traders and consumers, giving a significant boost to sales across categories,” CAIT Secretary General Praveen Khandelwal told Business Today.

Effective September 22, the government simplified GST to two main slabs — 5% and 18% — eliminating the 12% and 28% rates. Following this, carmakers and consumer durable firms that reduced prices have already seen strong sales growth, with expectations of a sharper rise in the third quarter as transition issues ease and deferred purchases materialize.

Emkay Global Financial Services noted that the GST cut has boosted consumer spending in the FMCG sector, benefiting companies with strong execution. It added that while some trade disruptions were seen, most sales are expected to recover in the third quarter.

Small retailers are now restocking at new GST-aligned prices ahead of Diwali, while the government continues to monitor price trends, especially in e-commerce, where anomalies were reported after the rate cuts. Industry sources believe most transitional challenges will soon stabilize.