Attribute Indian GP Success to No Gov't Involvement

Well here's something that might gladden the hearts of Cato or Mises Institute haters of all that is the public sector. I have just finished watching the inaugural Indian Grand Prix at the brand-new Buddh International Circuit, and I must say that the facilities look world-class. To observers of Indian sports hosting, the F1 race represents a remarkable turnaround from the Commonwealth Games fiasco of only a few months ago with the latters' collapsing structures, unfinished stadiums, and a squalid athletes' village.

It is perhaps prescient that in that previous post on the Commonwealth Games, I ventured that the forthcoming Indian Grand Prix would not be allowed to be held in such conditions by F1 impresario Bernie Ecclestone, and sure enough, the race was up to snuff. The reason given for hosting success this time around is, yes, freezing out public sector infrastructure work with its endemic corruption, shoddy building standards and so forth:

Another factor is that, unlike the Government-funded Games, the money to build the Buddh International Circuit and stage the grand prix has all come from private investment. Industrial conglomerate The Jaypee Group [JPSI or the race organizers] are behind rejuvenating a deprived area they are calling "Sports City" to the tune of £250million.

'It's very significant something like this has come up to showcase India,' [Indian Motor Sports Federation President Vicky] Chandhok added. 'It's not about Formula One, it's not about motorsport, India has never hosted something on this magnitude ever.

It further turns out that Indian government officials were not feted at the F1 confabulation as they usually are at other sporting events where they are treated like the new sahib (or foreign master). In a fit of pique, the sports minister went on Twitter to register his dismay at being shut out altogether:

The [current government] was left out of the megaeyeball F1 race frame, starkly contrasting with jamborees like the ICC Cricket World Cup and the Commonwealth Games, where political class rushed to tap the popularity.

The event featuring global icons was so curt to the political spectrum that sports minister Ajay Maken vented out with a sarcastic tweet: "When F1 is flagged off, as Sports Minister, I am laying foundation stone for Rs 5 crore synthetic track at P T Usha's academy in Koyilandi near Calicut."

Further government dismay at being shut out is shown by removing favourable tax treatments usually afforded to cricket and the aforementioned Commonwealth Games. Murali Sashidharan offers some fine commentary on government double standards with regard to F1 being treated as an "elite" sport unworthy of public attention. It's like the bad old days of the "licence Raj" being brought back just to harass F1:

The complaints coming up about the race is that the government is making it harder than normal in various departments, namely the tax and customs department. Unlike this year’s cricket World Cup or last year’s CWG, which were given ‘ national importance’ status by the sports ministry, the Indian GP has not been granted the same gradation and hence JPSI are expected to pay the duty for stuff like F&B, tyres, engine which will be imported for the race. The value floating around for this is ranging from Rs. 150cr to Rs. 600cr.

The tax row centred on the legislation which would make teams and driver pay a tax bill for portion of their income, potentially taking 1/19th of their income because India is one of the 19 races on the calendar. The government exempted this year’s cricket World Cup from income tax and also granted special tax exemption on income to residents and non-residents alike gained from international sporting events in India in 2006, when the country hosted the ICC Champions Trophy cricket tournament.

To be sure, other new hosting nations (i.e., China, Singapore, South Korea, Turkey, Bahrain, Abu Dhabi) have successfully held largely government-organized races in recent years. It may be a reflection of their respective political economies how private sector elites relate to those in the public sector. In turn these relationships affect the suitability of building a racetrack and hosting an F1 event. Other than India, the other major race without major government involvement is the British GP at Silverstone. There must be a lesson somewhere here.

At any rate, I must extend my hearty congratulations to the organizers of the inaugural Indian GP for putting on a superb show.

UPDATE: Oops, it looks like the other organizers of the (cancelled) Metallica concert did not fare so well. For whom the bell tolls, time marches on.