By Aftab Ahmed and Krishna N. Das

JAIPUR/NEW DELHI, India, Oct 22 (Reuters) - Indianbusinesses are stocking up more ahead of this year's bigfestival season than at any time in the last five years,expecting people whose earnings were relatively unaffected bythe pandemic to spend the money they saved during months oflockdowns.

India's biggest shopping season is at the time of thefestivals of Durga Puja and Diwali, which fall 20 days apart inOctober-November each year. Traditionally, this is a time whenhouses are re-decorated, big-ticket items purchased, feasts heldand gifts exchanged.

Businesses and shopkeepers expect more purchases than usualthis year, beginning with Durga Puja on Thursday, because themonths of lockdowns have resulted in pent-up demand.

Recent data shows that demand for diesel, power and cars hasalready picked up, and any resurgence of retail buying ofeverything from phones to furniture would bode well for India'seconomy that shrank 23.9% in the quarter ended June - itssteepest decline.*:nL4N2H71ZK*:nL4N2GS1OX*:nL4N2H72MR

Brokerage firm Nomura said its India business-resumptionindex for the week that ended on Oct. 18 hit its highest levelsince the country first imposed a lockdown in late March tocontain the coronavirus.

Big retailers such as Croma and Vijay Sales, both dealingmainly in electronics and home appliances, told Reuters sales inrecent days indicated that this holiday season could be betterthan last year and that they were actually worried abouttightening inventory in certain categories like entry-levellaptops and high-end televisions.

The Confederation of All India Traders (CAIT) said its 70million small businesses on average were planning for a bufferstock of around 14% this season compared with last year's 10%,to ensure they don't run out of goods should demand surge.

"In the last two months, despite facing a financial crunch,we have been procuring goods in anticipation that in the festiveseason we will have considerable footfalls," said PraveenKhandelwal, the group's secretary general, seated in hishome-fittings shop in Delhi's Karol Bagh area.

"Our expectation is that this will be the best Diwali for usin at least five years. Naturally, our stocks levels will be ashigh too."

Customer arrivals this month have already been the highestin about seven months, hovering around 10 per shop on average -still only about a third of the normal level but expected torise, Khandelwal said.


But not everyone is as enthusiastic. Shops and factories inthe city of Jaipur, typically bustling with local and foreigntourists, did little business on a warm afternoon this week.

Traders there said they had laid off staff as the city's keyincome source of tourism was still feeble and it did not have asmany salaried people as places like Delhi.

"Until a vaccine is out, I think we will keep operating at30-35% of pre-COVID levels," said Suresh Tak, owner of fourclothes shops and factories printing designs on fabrics.

Even Google's mobility data from last week for West Bengal,India's fourth-most populous state where Durga Puja is the mainfestival, showed that people were mainly visiting supermarketsand pharmacies, not retail and recreation facilities.

Thousands of miles away in the rural district of Satara inIndia's west, Nilesh Kadam says he is trying to save as much ashe can, having returned to work only recently.

"From June to August the company had given me a break asthere wasnt much work at the factory," said the 35-year old,whose company makes steel products. "This year I am not planningto make any big-ticket purchase."

Still, CAIT estimates Indians have amassed about 1.5trillion rupees ($20 billion) in savings since April, a chunk ofwhich could now be directed to holiday shopping.

Online retailers Amazon AMZN.O and Walmart Inc's WMT.N local unit Flipkart have also kicked off their annual salesevents with heavy discounts. Flipkart said on Wednesday saleshave tripled for more than 35% of its sellers this year and thatthere were "green shoots of recovery for everyone across thevalue chain".

Hindustan Unilever Ltd HLL.NS , the Indian arm of Unilever ULVR.L , on Tuesday reported higher sales and profits for theSeptember quarter and said its rural markets had been more"resilient" than the big cities.

"We believe the worst is behind us and we are cautiouslyoptimistic on demand recovery," Chairman Sanjiv Mehta said on anearnings call.

(Reporting by Aftab Ahmed and Krishna N. Das; Additionalreporting by Savio Shetty, Chandini Monnappa and RajendraJadhav; Editing by Raju Gopalakrishnan) ((; +91 987111 8314;))