Inflation hits on Diwali
The festive season has arrived and the imagination of Diwali is incomplete without sweets. Just think, unless there is shining silver work on Kaju Katli or Gulab Jamun, where is its sparkle? But this year the sweetness of festivals has been turned bitter by the rising prices of silver. The situation is such that the silver work which enhances the glory of sweets has almost disappeared from the market and shopkeepers are reluctant to buy it. On Tuesday, the price of silver in the spot market reached a record high of Rs 1.9 lakh per kg, which has created a worry on the forehead of the sweet traders.
This situation has become like a puzzle for sweet manufacturers. On one hand, the government has reduced the GST rate on sweets to 5%, which should have given them some relief, while on the other hand, the skyrocketing prices of essential commodities like silver have spoiled that relief. It is not possible for every shop to buy such expensive work, most of the shopkeepers are avoiding passing on the burden of this additional cost to the customers.
Skyrocketing prices, fading shine
This surge in the prices of silver work has directly affected the cost and presentation of sweets. Shivam Bhagat, owner of ‘Bhagat Halwai’, a more than two hundred year old establishment in Agra, says that last year on Diwali on Diwali, one leaf of silver work was available for Rs 5, this year it has increased to Rs 8. This is a direct increase of approximately 60%. He says, “The reduction in GST is definitely a positive step, but the continuous fluctuations in the prices of essential commodities like milk, sugar and silver are creating a big problem for businessmen like us. It is also becoming difficult to recover the costs.” During festival times when sales are highest, this type of inflation destroys profits.
Inflation destroys GST relief
For sweet traders, this situation is like “well in front, ditch behind”. The government had given them a big gift in the festive season by reducing GST, the purpose of which was to provide cheap sweets to the customers and promote business. But the fire in silver prices has tarnished all this hope. Sweet sellers are in a dilemma as to how to pass on the benefits of GST cut to customers when their own costs have increased unexpectedly. It’s not just about silver; Transportation costs and prices of other raw materials have also increased, due to which the total cost of making sweets has increased significantly.
Shopkeepers found new ways to save customers
Even in these difficult times, sweet sellers do not want to disappoint the customers. They know that customers spend lavishly on sweets for festive cheer and they want to maintain this tradition. Mumbai’s famous ‘Parsi Dairy Farm’ has decided that they will not increase the prices of sweets. Its Managing Director Bakhtiyar K. Irani said that the cost of the work he purchases has increased by 10-15%, but he will bear this burden himself. Meanwhile, Sid Mathur, founder of Delhi’s ‘Khoya Mithai’, has found a creative way to deal with this problem. He told that in some sweets the design of the work is being changed or its use is being reduced, so that the cost can be controlled and the beauty of the sweets is also maintained. These steps show how businesses are facing this crisis by giving importance to their relationship with customers.