Posted by: John Elliott | October 30, 2011

India shows what it can do with a winning Formula 1

It is often said that everything and the opposite is possible in India, and so it has been shown today. Just a year after the Indian government’s humiliating and appalling preparations and administration of Commonwealth Games in New Delhi, the private sector this afternoon delivered a spectacular Formula 1 Grand Prix race on time, efficiently, and without any mishaps.

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With a crowd of 95,000 and an international television audience said to total 150m, Sebastian Vettel (left) continued his winning F1 streak by driving his Red Bull Renault to victory at the end of a 90-minute 307km race.

Warnings about excessive dust blowing (and stray dogs walking) onto the new Buddh track in Noida, a Delhi satellite city, from nearby arid farmland did not materialise.

A rush in the final weeks to complete and tidy up the site appears to have worked and Vettel, along with other drivers, praised the track.

This showed what can be achieved when India’s bureaucrats stay largely out of the picture and politicians, probably taking a cut, allow the private sector to perform.

As is inevitable in India, there are stories of shady dealings, controversies, political rivalries and damaged egos. There is also serious concern about the way that the poor were ousted from their land to build the track and allied developments over the past year or so, and about low wages paid to the construction workers.

The Jaypee construction group which built and runs the race track has close links with Mayawati (presenting the trophy above), the egotistical chief minister of the state of Uttar Pradesh, which includes Noida – though the race has been seen as a Delhi event and a Delhi success, it is actually a success for one of India’s poorest states that is known more for corruption and lawlessness than business success and efficiency.

photo: Gurinder Osan - AP

The Jaypee group and other companies manage to straddle these potential contradictions. Jaypee housing and other projects linked to new highways that are also linked to the Buddh track (right) were at the centre of mass protests earlier this year against the transfer of land for business purposes.

Rahul Gandhi, heir apparent to India’s ruling dynasty, hit the headlines when he joined the demonstrators in May, protesting at the low levels of compensation that had been paid. As a result, Mayawati has had to amend the government’s land compensation policy and there have been court rulings blocking the use of some land for housing.

An article in Delhi’s Caravan magazine estimates that Jaypee will have made up to $30m in revenue from tickets, but will make a $35m loss on the race itself after sanction fees and other operational costs are paid – plus the $200m cost of the track itself. It suggests that while the track could turn in a profit within three or four years”, its real profits will come from real estate development. Sameer Gaur, a senior Jaypee executive and son of founding chairman Jaiprakash Gaur, has said that the group has around 1,500 acres of real estate to develop, which it obtained from the UP government on favourable terms.

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Jaypee has had front-page newspaper advertisements (right) this week for luxury housing with associated hotels and sports city that it is planning alongside the track at Jaypee Greens where the F1 teams have been staying in a golf resort.

There have also been criticisms about the price of tickets ranging from $55 to sit on the grass to $22,000 for corporate boxes that are way out of reach for the vast mass of Indians, as were concerts by Lady Gaga and Metallica  (the latter was abandoned).

But it is inevitable in a country like India that there will be such disparities. Jenson Button, a British McLaren driver who came second today, has said that coming to India was “difficult” for the drivers, who had been stunned at the living conditions visible outside their luxury hotels. “You can’t forget the poverty in India. It’s difficult coming here for the first time, you realise there’s a big divide between the wealthy people and the poor people,” he said.

Anand Mahindra, one of India’s top industrialists who runs an autos-based group and is an avid tweeter, commented on Twitter today: “The F1 is a turning point. I see Indians becoming the most car-crazy&car-knowledgeable people on earth.. Now, let’s build those roads.”

And also, he could have added, let’s make sure that in future the private sector is given the chance to build and run India’s potential success stories. If bureaucrats and politicians had not stupidly decided for prestige reasons to locate the Commonwealth Games in the middle of Delhi instead of a place like Noida, and had not handed it over to corrupt politicians and bureaucrats, that could have been a success too. The possibilities are endless, if only governments are prepared to paint themselves out of the picture.

Mayawati, who loves grandiose projects,  runs a corrupt state in UP and that casts a stigma over all that she does. However, the success of the Grand Prix raises an uncomfortable question – is it better to have international success on Mayawati’s terms or the Commonwealth Games type of humiliation allowed by India’s Congress-led government?

Photo: Prashant Vishwanathan - Bloomberg


Responses

  1. […] corrupt Bahujan Samaj Party (BSP) government, led by chief minister Mayawati who favoured JP companies with massive land deals and a grand prix circuit, and also persecuted sugar companies with vindictive […]

  2. […] massive corruption, she has licensed impressive bribe-clad highway and other projects, including a race track for a very successful grand prix motor race last […]

  3. Perhaps a bit superficial and disingenuous to think that F1 in Delhi happened as planned only because it was run by a private group. JP group as you mention is well linked to the political establishment of UP. No surprise that their project saw the light of day and it turned out to be a success. It simply proves that when industrial power and political power go hand in hand things happen. Now if you ask yourself the question whether the right thing happens, and by that I mean what people may need to improve their conditions, than I think the F1 GP was a waste of millions of dollars. Certainly not for JP group who will develop premium housing and commercial space for the few, nor for the UP politician (Mayawati in primis) who undoubtedly got their cut out of the whole event.
    So is this a case of private doing it better than public? I’d rather think it is a case of aligned interests between the two!!!

  4. Politicians & Industrialist both are enjoying Power game. It is unavoidable. Only sorrow is the common men is forgotten. Progress and Prosperity are major things for both and Nation. It should some how make the life style easier for people at large.

  5. So deep has been the abiding prejudice against cars among India’s politicians and planners that it is not surprising that the Indian Government gave so little support to the recent Formula 1 race. Ever since independence the ideals of Gandhian thrift and socialist simplicity had made Indian planners consider the car as a luxurious toy of the elite. The declared focus of planning was for the poor and cars, bikes and the petrol to drive them were always taxed to the hilt.
    Things are however changing even if Government thinking remains mired in the age of the Bullock cart. Most Indians above the age of 40 seem to consider the car as just a means of transportation. Those below 40 however think of cars and bikes as their grandfather’s used to think about their horses and are impassioned about their beauty, speed, grace, stamina, pedigree and many other attributes. Till recently many who could afford expensive cars felt guilty about flaunting their wealth

  6. I gave up on this article on reading “But it is inevitable in a country like India that there will be such disparities.”

    Very convenient to brush the real issues under the carpet with the “inevitability” clause. How is the F1 circuit more important than the homes and livelihood of the people displaced?

  7. This, as usual, is a superb summary of events. Is it impossible to find an honest politician in India? Still, I suppose it’s cheap to bribe the poor and make sure you are elected! Thinking of Noida, I was shocked at that new Temple complex. Does India need another Temple? Surely a new university or school would have been a better use of the industrialists and maybe ensure him a safer seat in heaven!

    noelrands

  8. An excellent summation of the situation and events surrounding both the success of F1 in India and the disgrace of the Commonwealth Games.

  9. Also private companies are not always better than govt. case in point DMRC (delhi metro) which is way better than reliance (mumbai metro) or L&T (hyderabad metro).

  10. Surely there is a third way where private cos. are given legitimate contracts following all procedures and laws and farmers are well compensated. I hate modi but that is exactly what he does. we need more like him.


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