THE BIG FAT INDIAN WEDDING IS PERHAPS TOO FAT FOR OUR ECONOMY

Weddings are a feast anywhere in the world. But in India, weddings are a full blown festival with vibrant colors, jolly faces and beautiful memories. The Big Fat Indian weddings are as magnanimous as the ones shown in bollywood.

Technically similar to any other (usually) small ceremony, a key difference is the money spent on everything. People usually spend all of their savings just to make that one day, a big day for them. So when it comes to weddings, Indian parents don’t even do any kind of cost-benefit analysis and it’s more like a reflex where the moment their children decide to get married, they open this treasure trove of money and jewellery that they have been collecting/saving since the day their children were born. Indian cinema has been the protagonist in this community wide change of preferences for weddings that people have recently had.

But now the question that arises is- Is it worth it for people to spend all their savings in one day? Why have people changed their preferences from having a simple ceremony to one that is gigantically expensive and lavish? And are these big fat weddings doing any good to us?

So, first let’s try and find out a reason for this change in preferences!

Basic reason for this perhaps lies in the fact that the incomes of the people have increased over time which have led to an increase in consumption expenditure because of the income effect and hence people are spending more on weddings than their forefathers ever did. It has all started with the richest people in the income hierarchy. The opulence in their weddings has influenced the upper middle class and the lower middle class to follow their steps. It is this trickle-down effect or to be modest ‘follow the herd’ ideology of people that has made the wedding business so successful. The average cost of an Indian wedding in the U.S. is $65,000, while hard data on the size of the Indian wedding industry is not easy to come by, but it is estimated that this industry is growing at about 25% to 30% per year. I am sure many of the economists would agree to how important it is to have this kind of growth in other sectors of the economy such as agriculture which has a major part of the population involved in it and manufacturing which is crucial to our economic growth. It is therefore surprising how despite the sectors that are in need of money are unable to channelize funds whereas the wedding industry has been bestowed with this huge inflow of funds simply because of a shift in preferences.

Now let’s try and answer whether these lavish, Bollywood style weddings help the economy or not?

In my opinion, an individual should spend according to his needs and requirements and not under any kind of societal or peer pressure. In India people continue to spend on weddings in huge amounts. No recession or sluggish periods have had a deep impact on the wedding business. Even after immensely significant economic decisions made by the government i.e. demonetization and GST which has had an impact on nearly every sector and business, the Indian wedding industry stands upright as a $38 billion business. Moreover there are a lot of people engaged in this business. For instance, caterers, decorators, music artists, wedding planners, tailors etc.  And due to credit multiplier, there's stimulation not just for the desired sector but for the entire economy.

An economy where people save creates wealth. Creating wealth is not any good for an economy as money does not come into circulation and there is a decrease in investment prospects as well. If people don’t spend, especially the top one-percenters, then money will not exchange hands and the multiplier effect won’t come into play. It is very important for an economy to be a spending economy in order to grow.

Although these weddings give Indian economy a boost, with total worth of 100,000 to 110,000 crores a year, giving birth to various sort of employment opportunities but I would like to suggest that spending the money in the activities which are a part of consumption expenditure helps the economy grow but not as efficiently as investment expenditure does. I agree that both of them are a part of aggregate expenditure and stimulate the economy but as we know that India is a developing country and there is widespread poverty, so investing in banks or equity shares or bonds will obviously give people more yield than spending money in weddings which is just a one day business. Investment spending will not only help people on an individual level by providing them secured returns for the future in long run but it  is also good for the economy as a whole.

I would like to conclude by saying that a country where education, health, sanitation, poverty, governance, crime, inequality, financial literacy and so many other areas of importance are in a dismal state, is spending money on weddings really ethical? It is important for us to channelize excessive funds in sectors of national and economic importance before anything else.

A strategic change of preferences is always desirable for a country when the income of it’s population starts increasing!

—Eshita Goel, Year II