Madan Sabnavis, chief economist at Bank of Baroda, estimates World Cup-induced consumer spending to be ₹18,000-22,000 crore in hard currency. This will yield ₹7,000-8,000 crore in gross value added (GVA) to the economy.
Big sporting and recreational events tend to spur consumer spending, giving a push to the local economy. And in India, nothing matches the popularity of cricket.
Fans are expected to spend on travel, hotels, big television sets and ordering food on match days, as well as at local pubs and sports bars that show matches on large screens, and so on.
“We can see the World Cup providing a delta to consumer spending, especially on services,” Sabnavis said. “This will provide impetus to demand, as it starts at the time of the kharif harvest and goes through the festivals of Dussehra and Diwali.”
The ICC tournament, which gets underway in Ahmedabad on Thursday, is the first men’s cricket World Cup that India will host exclusively. Featuring 10 teams, it will see 48 matches played over 46 days across 10 cities.”It’s a big event, so there will be a lot of events and spending around it, which could end up having a marginal impact on growth in the third quarter,” said Rahul Bajoria, head of emerging markets (ex-China), Asia economics, at Barclays.Gaura Sengupta, economist at IDFC First Bank, said private consumption expenditure on recreation, culture, restaurants and hotels is around 1.4% of GDP, which is likely to get a boost from the Cricket World Cup. “During the 2010 Commonwealth Games, a pick-up was seen in private consumption expenditure on recreation, restaurants and hotels,” she said.
Broadcasting-related services, which have a 3.8% share in GVA, and the transportation sector, particularly air travel, railways and roads, which have a share of 3.9% of GVA, will also get support, Sengupta said.
Paras Jasrai, senior analyst at India Ratings and Research (Ind-Ra), however, said high inflation and an erratic monsoon would limit the impact of the cricketing event on GDP growth in October-December. “The impact on growth, owing to increased consumption, could be under 10 bps,” he said. Ind-Ra expects 5.4% growth in the third quarter.
India’s economy grew 7.8% in April-June. The Reserve Bank of India expects growth to ease to 6.5% in the second quarter, and 6% in the third quarter.
Inflation Googly
On the inflation front, Jasrai believes the World Cup’s impact would be marginal, limited to under 10 bps on services inflation. “It may stem the decline in services and core inflation that we have been witnessing,” he said.
India’s service inflation eased to 4.9% in August, compared with 6.2% in January 2023.
“Prices of hotels are already up, as is the case with travel, which will push up services inflation when headline inflation is moving down,” said Bank of Baroda’s Sabnavis.
Experts said headline inflation in September is expected to fall below the 6% mark, from the 15-month peak of 7.4% in July.
