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Where have all the savings gone?
February 24, 2009
Russia announced a 15 per cent cut in its budget for the 2014 Winter Olympics slated to be held in the Black Sea resort of Sochi.
It seems to be the correct course for an economy which is officially slated to contract by over 2 per cent this year (though some economists are predicting a much harsher contraction of 10 per cent) with a budget deficit of 8 per cent.
However, slicing about $8 billion off the Games budget is not going to impact any real Games activity, since this is a 'saving' made possible by the dip in the price of construction materials.
Since the price dip is fairly global in nature, there should be a similar case for saving in the budget for the 2010 Delhi Commonwealth Games. No one is talking of it however.
What we have seen instead are repeated requests for increase in the funding for the Games.
Sports minister MS Gill, who for all practical purposes is anchoring the Commonwealth Games preparation, proudly stated last week how his requests for additional funding are always acceded to by the Cabinet.
Even without the funding constraint, doubts have been raised by the Commonwealth Games Federation about India's preparedness to host the event in October next year, but that is another story altogether -- we are a 'last-minute' nation and almost proud of it.
The last official estimate of the expenditure on Commonwealth Games 2010 is almost Rs 8,000 crore or about $1.6 billion. This is what Gill told the Rajya Sabha two months ago.
The largest chunk of this is earmarked for the development and renovation of the sports stadia (Rs 2,200 crore or Rs 22 billion) to host the various sporting events like tennis, archery, hockey, swimming, shooting, wrestling, cycling, squash and netball.
This should have a lot of potential for saving, given the slide in the price of basic construction materials like steel and cement.
Then there is money set aside for the Organising Committee, which is headed by Suresh Kalmadi, for the conduct of the Games (Rs 1,630 crore or Rs 16.3 billion), for the Delhi government to invest in its civic infrastructure (Rs 770 crore or Rs 7.7 billion), for the Delhi Development Authority to construct the Games Village and associated sports infrastructure (Rs 632 crore or Rs 6.32 billion), and a pretty significant amount -- Rs 678 crore or Rs 6.78 billion -- for the preparation of teams for the Commonwealth Games under which about 1,280 players would be trained in the 18 sports that will be played during the Games.
Earlier this month, finance minister Pranab Mukherjee also announced enhanced allocations for the ministry of youth affairs and sports to ensure the 'availability of adequate resources' for the hosting of the Games next year. So the revised expenditure estimate for the sports ministry (plan and non-plan) is up 95 per cent to Rs 1,593 crore or Rs 15.93 billion this year and bumped up further to Rs 1,764 crore (Rs 17.64 billion) next year.
I know I could be accused of comparing apples and oranges but just look at the outlays for some sectors which we have declared as priority in the coming year. The expenditure estimate for the ministry of new and renewable energy is a paltry Rs 628 crore (Rs 6.28 billion) -- which is even less than what has been set aside for the preparation of teams for the Games.
Similarly, the 2009-2010 budget for the ministry of housing and poverty alleviation is Rs 857 crore (Rs 8.57 billion), while it is Rs 300 crore (Rs 3 billion) for the food processing industry. The outlay for the water resources department is Rs 1,000 crore (Rs 10 billion) for the next year.
This for a country in which not a single city is able to ensure 24x7 water supply and half the population does not have access to safe drinking water. Ironically, the national water policy of 2002 identifies drinking water as the number one priority in water allocation.
There are those who cite the $67 billion that Beijing is believed to have spent on the Olympics last year and the $13.3 billion budgeted for the London Olympics to argue for additional funding.
According to one estimate of the Delhi government though, the spend on the Delhi Games is also as much as $13 billion if one throws in the Metro lines that are being built and the power plants that are supposed to come up. There may be a stimulus effect of this spend, but there can be no case for spending more where less will do.
We need to recognize that we are living through a time when there are no holy cows. The budget for the Commonwealth Games need not always head in one direction -- north.
This is especially true at a time when the Indian economy is in the throes of a serious bout of unemployment and depressed demand which is shaving off growth. The fiscally constrained government needs to spend smartly and ensure that it gets the loudest bang for the buck!
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