India's Splendid F1 Race

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

With a crowd of 100,000 and an international television audience said to total 150 million, Sebastian Vettel continued his winning F1 streak by driving his Red Bull Renault to victory at the end of a 90-minute, 307-km 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 materialize. 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, the egotistical chief minister of the state of Uttar Pradesh, which includes Noida – though the race has been regarded as a Delhi event and a Delhi success, it is actually a success for one of India’s poorest states, which is known more for corruption and lawlessness than business success and efficiency.

The Jaypee group and other companies managed to straddle these potential contradictions. Jaypee housing and other projects linked to new highways that are also linked to the Buddh track 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 US$30 million in revenue from tickets, but will make a US$35 million loss on the race itself after sanction fees and other operational costs are paid – plus the US$200 million cost of the track itself. The article 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 Uttar Pradesh government on favorable terms.

Jaypee has had front-page newspaper advertisements (right) this week for luxury housing with associated hotels and a 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 US$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, 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 realize 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 Uttar Pradesh 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?

(John Elliott blogs at Riding the Elephant, which appears on this page.)