The Impact Of Cricket World Cup 2023 On Indian Economy

Various sectors of the Indian economy are lit these days. Be it the hospitality sector with sky-high air-ticket prices, a 200% increase in the room reservation of hotels, or a hike in tourism rentals. Even the beverage industry’s stocks are soaring high! Can you guess the prime reason? It is none other than the Cricket World Cup 2023!

It’s not just about the physical viewership in stadiums but also about television and OTT viewership. When India plays, many folks are glued to their screens, especially on weekends. Can you imagine the enormous amount of revenue that will be generated? Around Rs.3000 crore.

That’s not all! 

The Cricket World Cup 2023 in India has a way bigger impact on the economy than what you can think of! Surprised? Curious about the good things it brings? Well, this article will tell you all about the advantages and challenges of it.

So, stay with us for the full story!

Synopsis

The Cricket World Cup 2023 in India could really help India’s economy. Economists at Bank of Baroda think it might bring in about Rs.220 billion or $2.6 billion. This is because lots of people from India and other countries will come to watch the games.

If you carefully observe the schedule of the Cricket World Cup 2023, you will see that the majority of the matches will be played across 10 cities of India. And the positive sign is- it will highly benefit the travel and hospitality sectors.

This special event is happening in India for the first time since 2011, and it’s taking place during a three-month festive season that starts in September. No wonder, this is a green flag for the retail stores too! Why? You may ask. Because the folks will go for “sentimental purchases of merchandise.”

As per the economists, the total Indian viewership for the tournament including physical, television, and streaming platforms will surpass 552 million. This was the total viewership in the year 2019. Can you guess how much TV rights and sponsorship revenue will it generate on a conservative basis? Rs.105 billion to Rs.120 billion!

That sounds like a purple patch for our economy. Isn’t it? Look at the next section for detailed information.

Revenue Generation: Biggest Impact of Cricket World Cup 2023 on Indian Economy

Look at the table below which shows the estimated revenue and impact of different aspects (revenue streams) on our economy-

Thus, the overall economic impact is the boost in various industries. 

List of Advantages

• Tourism and domestic spending are surging.
• The hospitality and travel sectors are set to thrive.
• TV rights and sponsorships: $1.26M – $1.44M projections.
• Retail sales, especially cricket merchandise, are rising.
• Increase in India’s soft power
• Rise in GDP of India
• Employment generation
• Rise in household consumption & and spending

Cricket World Cup 2023: A Rs.13,500 Crore Boost for the Indian Economy

Regardless of the World Cup outcome, India’s economy is expected to receive a significant boost of approximately $1.64 billion (Rs.13,500 crore), as per a BQ Prime report. The ICC World Cup 2023 will draw fans from India and around the world, driving increased air travel, ticket sales, hotel bookings, dining, merchandise purchases, and tourism. 

This economic surge will particularly benefit the aviation and hospitality sectors, with hotels seeing substantial rate increases, especially during marquee matches like India-Pakistan clashes. Restaurants and fast-food chains are also set to thrive, serving both tourists and the domestic market. 

Thus, the combined economic impact of direct and indirect spending during the tournament is projected to reach at least $1.6 billion.

First of all, let’s see the number of physical viewers of the match in the stadium who will directly contribute to the revenue generation-

(A) Audience in Stadium

With an assumed 100% stadium occupancy for all matches in every stadium, the estimated total number of attendees stands at 2.48 million. Analyzing data from the past two World Cups, it’s found that on average, 20% of attendees are international visitors, while 40% each are Indians from outside and within the host city.

(B) Primary Expenses of Individuals

The key costs of the folks include-

• Airfares
• Hotel Accommodation
• Stadium Admissions
• Food & Beverage
• Intercity Transit & Tourism

Let’s dive into the details one by one-

(B.1) Air Travel

This category covers round-trip expenses related to travel to and from the host city during high-stakes matches. We’ve excluded international travel costs as they may not necessarily benefit Indian airlines.

Round Trip Air Ticket Prices in INR

(B.2) Hotel Stay

The calculation for this is based on the average per night tariff of three, four, and five-star hotels during the World Cup.

Hotel Cost per Night (INR)-

(B.3) Stadium Admissions

This category simply represents the price of match tickets for each city. Let’s look at the ticket price per match-

(B.4) Food & Beverages Costs

This encompasses the cost of three meals a day, considering three, four, and five-star restaurants. One meal is assumed to be low-cost and the other two meals are of average cost. Thus, the total consists of 2 average meals and one low-cost meal.

(B.5) Intercity Travel Costs

Expenses are calculated for a round trip between the airport and the stadium, with an additional allocation of Rs.350 to cover extra travel expenses for each visitor. Let’s look at the transit cost per match-

(B.6) Cost per Attendee

For visitors from within a city, the average cost per match is Rs.7,600, resulting in a total cost of approximately Rs.755 crore. For intercity and international attendees, the average cost is estimated at Rs.32,100 per match. With 1.49 million intercity and international attendees, the total direct impact of this group is estimated at Rs.4,781 crore.

(C) The Direct Impact

The sum of all the costs mentioned above represents the direct cost per match for an individual fan, and this cost varies from city to city. For example, an attendee traveling from Delhi to Mumbai will spend Rs.30,200, while one traveling from Mumbai to Delhi will spend Rs 29,600.

Let’s look at the cost per attendee per match in INR-

(D) The Indirect Impact

Let’s look at some of the indirect impacts of the Cricket World Cup 2023 on the Indian economy-

(D.1) Tourism

This category factors in international travelers, assuming they wouldn’t incur significant airfare expenses solely to attend matches. On average, tourists visiting India allocate 30% of their budget to airfares and 70% to tourism and related expenses. The average round trip cost for travelers from nine participating countries, excluding India, is Rs.63,000. 

Therefore, the remaining 70% amounts to Rs.1.47 lakh. Since this 70% also includes direct match-related spending, it is subtracted. Hence, an international attendee is estimated to spend at least Rs.1.14 lakh on tourism. In total, international travelers are expected to spend about Rs.5,705 crore on tourism in India during the World Cup.

(D.2) Infrastructure

According to media reports, the BCCI is investing Rs.50 crore in each of the 10 World Cup stadiums, totaling Rs.500 crore in infrastructure and stadium-based renovations. Consequently, the total indirect financial impact from tourism and infrastructure is estimated at Rs.6,200 crore.

(D.3) Increase in India’s Soft Power

Consider this scenario- Why did Qatar invest a staggering $229 billion in hosting the 2022 FIFA World Cup? The answer lies in the concept of soft power. For nations, it’s not just about financial gains, it’s about showcasing their pride and gaining international recognition. Pouring vast sums into the infrastructure of global sporting events serves as a statement to the world that they are prime destinations for investment and business. The World Cup, with its global media coverage, creates a captivating halo effect that bolsters a country’s image as an appealing tourist hotspot.

Now, let’s shift our focus to the world of global giants like Google, Amazon, and Emirates, all vying to capture the attention of Indian consumers. These companies are the ones that are investing big in the Cricket World Cup 2023.

They are splurging an astonishing $3,600 per second on Cricket World Cup advertisements as sponsors! This extravagant spending spree is a windfall for Disney+ Hotstar, the tournament’s official broadcaster and digital media rights holder.

(D.4) Rise in GDP (Gross Domestic Product) of India

According to experts from Band of Baroda, most of the money will come from three main sources: the money they get from showing sports on TV ($1.45 billion), the money they make from showing the games in theaters and delivering food ($605 million), and the money they earn from selling tickets to people who want to watch the games ($266 million). 

In the food and drink industry, fast-food restaurants, food delivery apps like Zomato and Swiggy, and drink companies like Coca-Cola and United Breweries will also make a lot of money. 

Even places where people stay and how they get there, like hotels and transportation, will have a big impact on the country’s money ($102 million), mostly because visitors will spend money on staying in hotels, eating and drinking, buying things, and traveling.

For example, in Ahmedabad, hotels have increased the cost of their rooms by 200%, but they’re all booked up, and plane ticket prices have gone up by 415% because of the big game that’s happening at Narendra Modi Stadium on 14th October between India and Pakistan. So, it’s clear that India will be getting a lot of money from foreign investors.

(D.5) Employment Generation

Hosting the World Cup will result in an expansion of the job market across various fields like construction, retail, hospitality, and other professional services. This means more people will find employment opportunities in these sectors, contributing to workforce growth.

(D.6) Rise in Household Consumption and Spending

When more people have jobs, they tend to buy more things, which is a good sign for the economy. This happens because when more people work, they earn more money, and that allows them to buy more stuff. But, since the festive season is almost here, people will be buying even more things, and that might cause prices to go up a bit, by maybe 0.15% to 0.25% for this quarter.

Challenges: Growth vs Inflation

Much like the age-old adage that every coin has two sides, similarly the upcoming Cricket World Cup 2023 is full of ups and downs. Although it promises to bring tons of excitement and enthusiasm to India. But it also casts a shadow with its potential negative impacts. 

Let’s delve deeper into these repercussions-

1. Inflation Projection

One of the immediate concerns is the projected increase in inflation rates. Economists are forecasting a moderate uptick of approximately 0.15% to 0.25% for the months of October and November. This rise, although seemingly small, can have significant consequences for the economy and the pockets of ordinary citizens.

2. Surging Travel Costs

As the nation gears up to host this monumental sporting event, another issue that has raised eyebrows is the sharp surge in airline ticket prices and hotel rental rates. This spike is expected to hit ordinary citizens who simply want to undertake regular travel, not necessarily motivated by cricket fever. For these individuals, the sudden escalation in travel expenses is bound to be disappointing and may even force some to reconsider their plans.

3. Service Charge Hikes

Beyond the formal economy, the informal sectors in the host cities are also feeling the heat. Service charges in these areas are on the rise, impacting various aspects of daily life. Whether it’s a meal at a local restaurant, a ride in an auto-rickshaw, or a simple shopping excursion, the increased service charges can add an unexpected financial burden for residents and visitors alike.

While the Cricket World Cup undoubtedly brings moments of euphoria and national pride, it’s crucial to recognize that it isn’t all sunshine and rainbows. These negative impacts, ranging from inflation concerns to elevated travel and service costs, highlight the need for a balanced perspective. Especially at the time when India plays host to this grand sporting spectacle in 2023.

Conclusion: The Overall Impact of Cricket World Cup 2023 on Indian Economy

Thus, India will receive a significant impact of hosting Cricket World Cup 2023. When combining the direct and indirect impacts, we arrive at a figure of Rs.11,750 crore. Additionally, we assume an extra 15% impact to account for smaller and diversified spending on merchandise sales from local vendors, according to estimates by an economist who wished to remain anonymous. This brings the total estimated economic impact of the Cricket World Cup 2023 to Rs.13,500 crore or approximately $1.64 billion at prevailing exchange rates.

Furthermore, the significant cricket tournament will contribute to government revenues by generating additional income from ticket sales and collecting taxes on various fronts, including hotels, restaurants, and food delivery services. This will ultimately enhance the nation’s fiscal capacity!