Where there’s a few million dollars of expenditure, there’s usually an economic study pondering how the money was spent. This is particularly true of big-ticket sporting events such as the Olympic or Commonwealth Games. Even as the cost of hosting the Olympics touched a dizzying $40 billion in Beijing last year—more than the entire gross domestic product of Sri Lanka—the literature on the economic effects of such games has grown. Most scholars see only negative economic benefits to hosting these events. From past studies, Mint culls five key conclusions and transplants the benefit of their hindsight into Delhi’s preparations for the Games.
Infrastructure
Delhi Metro Rail Corp. workers give the finishing touches to a tunnel between Jangpura and Lajpat Nagar. Ramesh Pathania / Mint
When Darren McHugh, a Queen’s University scholar, conducted a cost-benefit analysis of the 2010 Winter Olympics to be held in Vancouver, Canada, he made one crucial observation. The infrastructure projects with the heftiest costs were those “that would not have been built without the Olympic bid attempt, and were not otherwise worth building”—white elephants, to use the popular euphemism.
There will be many of these pachyderms roaming Delhi after the Commonwealth Games, says K.T. Ravindran, chairman of the Delhi Urban Arts Commission (DUAC). He cites one Rs800 crore flyover running “from nowhere to nowhere” along Barapullah Nullah. “That route could have just been managed with proper planning, by reprofiling the streets. In the name of the Games, a lot of projects have pushed for quick clearances and sometimes even bypassed clearances.”
Click here to view a slideshow of the original Games research
A Commonwealth Games fact sheet announces that Delhi will invest Rs26,000 crore in infrastructure. Much of this will go towards the Metro and the airport—expenditure that would have occurred anyway. But of the Rs7,000 crore allotted to stadiums and roads, Ravindran is sceptical. “Many projects were started without our clearance and are therefore illegal,” he says. “And many of the new stadiums will be junked just as the [Indira Gandhi] indoor stadium was junked for 20 years after the 1982 Asian Games.”
Markets
If there are any benefits to be had from hosting a sporting event, one line of reasoning goes, the market will sniff them out. In a paper titled
The Financing and Economic Impact of the Olympic Games, economists Brad Humphreys and Andrew Zimbalist recalled the small but perceptible reactions of stock exchanges to Games announcements. After winning the 2004 bid, Athens saw a “short-term, significant increase in overall stock returns”.