Aug

13

The economics of swine flu - I

August 13, 2009 posted by indiatime |

The swine flu epidemic is so far purely a health crisis. And it will be so for a while. But one of the downsides of not having managed to stem the tide earlier, is slowly going to be seen on the economic front. Already, many avenues on that economic fronts are being hit hard:

1. Retail: since people will be staying home and not strolling in the malls and on the streets. With the festival and holiday season right around the corner, the impact is even worse, since many retailers make much of their annual income during these few months.

2. Entertainment: Especially, Bollywood, since so much of the business there is based on crowds showing up at the movies. Television, will however, have a bigger audience and many more eyeballs watching.

3. Transportation: Actually, transportation and civil aviation may be showing an uptick in the initial period, as people scramble to get to the place of their choice during such critical times. Most will be traveling home to be closer to families, plus since the cities are affected the most, there is a mini-exodus away from the cities to smaller towns and villages.

4. Tourism: Tourism will take a major hit, near-term as well as long-term. International tourism will drop rather drastically. Visuals of locals moving around in masks is hardly the kind of tourism commercial India would want the international tourists to see.

5. Food-related industries: e.g. a lot less eating out, and the restaurant industry will take a direct hit.

6. Pharmaceuticals: Typical flu season remedies are already in high demand, but the biggest beneficiaries are the mask-makers, especially those that make and distribute the special flu masks or respirators.

7. Medical Tourism: Takes a huge hit because of swine flu. With TV images of unclean hospitals with unhygienic conditions and discarded and infected masks lying around or thrown on the streets, it’s hard to convince the world that cheap is better.

8. Outsourcing: Although outsourcing is supposed to work remotely and via telecommutes, India is where the actual human factor of outsourcing lives, so any shift in the workforce is bound to affect that. In an industry where deadlines and timely deliveries can mean much, employees not showing up can prove quite inconvenient.

9. Sports: The world badminton tournament has already lost a few teams where players of some countries have chosen to flee home. Soon, Cricket too, may take a backseat to the epidemic flu. Thankfully, the commonwealth games are a year away.

10. Finance: Reduction in short and long-term investments is one of the adverse effects that is little discussed but is much-feared.

Scientists who study the effects of epidemics on economy, point out that the need for flexibility in resource allocation and the limitation of movement of the masses are two of the biggest challenges posed by epidemics. In a country like India, those challenges are further heightened, firstly by existing infrastructural challenges in resource allocation and distribution, and secondly by the size of the population where it’s not just limitation of people’s movement but the challenge of limitation of movement for a billion people.

Swine flu has already overwhelmed and overburdened some giant economies. For India, however, it brings economic challenges of proportions that are best best kept mum about. Unless controlled soon, we may be seeing the impact of this H1N1 flu for many years to come.


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8 Comments so far

  1. Global Voices Online » India: Swine Flu Scare on August 14, 2009 7:28 pm

    [...] economics of Swine Flu is quite intriguing. Already the price of surgical masks has gone 20 folds and still its [...]

  2. Swine Flu - 10 sectors hit by Swine Flu impacting Indian Economy on August 21, 2009 8:33 am

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