Companies across sectors plan to tighten their purse strings and slash their corporate gifting budgets by up to 20 per cent as the onset of festival season has not been very encouraging for India Inc. amid uncertain recovery in economic growth and a deficient monsoon leading to growth in prices of essential commodities, noted a quick survey ASSOCHAM.

"Depreciating rupee, weak consumer demand showing up in sluggish sales, muted wage growth, impact of turbulence in global markets are certain key factors forcing corporates to slash their Diwali gift budgets significantly," highlighted the survey conducted by ASSOCHAM.

Though in recent times festivals have become an occasion to exhibit luxurious living and with heavy pay packets the spending capacity of people has only grown, however cost of living and prices of food items have grown faster than earnings which is compelling people to refrain from overspending during the festive season, highlighted the survey conducted under the aegis of ASSOCHAM Social Development Foundation.

"A new government had been elected last year which boosted optimism and led to a rise in consumer confidence together with improved job security and a perceptive improvement in business sentiment which encouraged companies to increase their festive budgets by 10-15 per cent last year during Diwali," said Mr D.S. Rawat, secretary general of ASSOCHAM while releasing the findings of the chamber's survey.

"But this time around there is a bleak business outlook for trade and industry as government struggles to rev up economic growth and labour market," said Mr Rawat.

Besides, over half of the 500 companies' representatives that ASSOCHAM had interacted with said they plan to cut their festive budgets by at least about 20 per cent as compared to last year.

Of the rest, many said they plan to reward only performing employees and premium clients this Diwali as it being an annual ritual of sorts.

Remaining companies' representatives said they have not made any plans so far in this regard.

Decline in profits owing to a lull season, poor monsoon, global slowdown, sluggish domestic investment scenario, high prices, interest rates, weak consumer sentiment, rupee devaluation and others are key reasons highlighted by the companies for cutting their corporate gift budgets, noted the ASSOCHAM survey.

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