People buy new clothes, curios, handicrafts and electronic goods, among other items, not only for themselves and their families but also for friends and more distant relatives. This is also when wallets burgeon with generous annual bonuses.

This has been the case all these years.

This year, however, the Deepavali spirit has been laid low.

Even India's maiden moon mission, launched this week, and its victory over Australia in the second cricket Test have failed to lift the gloom.

Continuing global economic uncertainty and inflation have sent food prices soaring - dampening the traditional sharp rise in spending usually seen during the run-up to the Deepavali festivities.

Retailers, including malls that are normally packed with milling crowds at this time, report a 40 per cent drop in sales.

And almost every sector of the market has been hit - from retailers to real estate, from electronic goods to spices.

Visits to markets and malls, usually filled with shoppers after great bargains, reveal only a trickle of customers.

'Unless sales pick up in the last few days before Deepavali, we will be left with all these unsold goods,' said Mr R.S. Shukla, 81, who was sitting outside his electronic goods shop reading a newspaper. He said this is perhaps the first year he has had the free time to do so during this festive season.

'At this time, there is usually no place to move in this market. But this year, we are getting barely half the clientele,' said Mr Murli Mani, the president of the Karol Bagh traders' association.

'We are seeing far fewer people in the markets and the malls than in previous years,' said Mr Praveen Khandelwal, the general secretary of the Confederation of All India Traders.

He added: 'Because of America's economic recession, the Bihar and Orissa floods and the Delhi bomb blasts, the market is in a huge slump. Normally, sales surge by 20 to 40 per cent at this time. This year, they have fallen by 30 to 40 per cent.'

Mr Sanjeev Bansal - whose company, Chemzone India, specialises in corporate gifts, which are normally hugely popular before Deepavali - said there were fewer orders this year, down from 10 million rupees (S$304,000) to 4 million rupees.

At least 30 firms had cancelled their orders, while 20 others had halved them, he said. Even the orders he had received were mostly for cheaper items.

And the manufacturers of these gift items are even more depressed by the drop in demand for their goods.

Popular markets such as Karol Bagh, Lajpat Nagar and Sarojini Nagar have all been illuminated and their shops decked up for the occasion, but customers are shying away, shopkeepers said.

Mr J.S. Singh, an importer of festive lights from China, said that - in contrast to previous years, when these lights were in heavy demand - sales had not picked up this year. He said the response was 'lukewarm' even after prices were cut.

Customers cite various reasons for not splurging this time.

'How can you buy anything? Prices are on fire,' said housewife Usha Chawala. 'We're buying only what we must - nothing extra. My shopping is restricted to diyas (earthen lamps) and sweets.'

Security concerns have also been cited as a factor for the scarce crowds.

'This is when terrorists target shoppers,' said Mr R.S. Diwedi and his wife, who chose to shop in a mall located in Delhi's Rajouri Garden, which is deemed safer than popular retail markets.

Even the sale of sweets, a must for Deepavali, is reported to be slow.

'Sales are poor this year - not because of security concerns but because of the rise in prices,' sweet-shop owner Subash Jain said. He attributed a 20 to 35 per cent rise in the prices of popular sweets, such as cashew barfi and kalakand, to the increase in the prices of ingredients.

Perhaps the worst-hit are the real estate companies.

For years, they have made a killing as the market soared. But now, because of falling demand, some top realtors - including Unitech, Ansal and Parsvnath - are reported to have defaulted on payments for land they acquired from the government at high prices.

The market has shrunk in Delhi suburbs. Once, 50 to 100 flats were booked each day during this season in places such as Gurgaon, Noida and Greater Noida, but recently, bookings have dropped sharply. On Thursday, for instance, not a single booking was reported, said a senior official of one company, who did not wish to be identified.

As a result, the companies have been trying to tempt prospective buyers with attractive freebies.

Jaypee Group, for instance, is reportedly offering gifts such as Swifts, BMWs or Toyota Land Cruisers, depending on the price of the flats.

Industry sources noted that such offers represent huge discounts - a Mercedes costs 2.5 million rupees or more - but developers did not want to use that term 'because they do not want the value of the property to come down; they want the real estate bubble to continue'.

Will the light shine brighter by the next Deepavali? Only time will tell.

pjay@sph.com.sg