The Economics Behind Bollywood

The suspense, the laughter, the horror, along with the much synchronized dance steps and music all concoct to compromise to compromise a film in Bollywood . However, behind the screening of a film, which is just the tip of the ice berg, is a large calculation of economics .

Bollywood is a mixed economy with both the government and the private sectors having an influence over it. It is labor intensive and provides 18.8 lac jobs. It has employment generating capacity of nearly 35,000 per year . Film placements are currently ranking in anything between Rs. 50,000 to a Rs. 50 million for the producers.

Bollywood not only finds a market within the country but has much demand overseas too . Domestically, almost 20 million people go to movies on a daily basis and pay the equivalent of an average India’s daily wage. The industry is attracting more and more foreign direct investment. The reason being that apart from the non-residential Indians settled abroad who indulge in India  cinema to connect to their culture, the music in the films attracts a market in the middle east .

These days, the benchmark for a successful Bollywood film is if it collects Rs. 100 crores . Gone are the days when the duration of a film’s survival in theaters measured its success. But for the crew, their production is only successful when the revenue outruns the costs. Selling a movie has amplified the film budgets . Thus, a producer recovers 80% of the costs by selling the film to the distributors before its release. However, irrespective of whether a film is able to make profits, the government faces no losses . According to the report Economic contribution of the Indian motion picture and television industry ‘ by financial services firm Deloitte, the entertainment industry is in good health, contributing Rs. 500000 crores to the economy, equating to 0.5% of GDP, in 2013 .

Thus, the entertainment industry is one of the highest revenue earning sector for tax. Be it critically acclaimed films or commercial titles, Hindi cinema contributes not only economically but also leaves a cultural and social impact on the viewers .

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