research paper- Suvarun Mazumder

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Commonwealth games and its impact on the Delhi Economy Page 1 Submitted for the partial fulfilment for the award of Degree of Bachelor’s in Economics to the faculty of NMIMS. NMIMS’ SARLA ANIL MODI SCHOOL OF ECONOMICS 2010 Commonwealth Games and it’s impact on the Economy of Delhi Name : Suvarun Mazumder (A036) Submitted to : Professor Sneha Thayyil Submitted on : 28th March, 2016

Transcript of research paper- Suvarun Mazumder

Page 1: research paper- Suvarun Mazumder

Commonwealth games and its impact on the Delhi Economy Page 1

Submitted for the partial fulfilment for the award of Degree of

Bachelor’s in Economics to the faculty of NMIMS.

NMIMS’ SARLA ANIL MODI SCHOOL OF

ECONOMICS

2010 Commonwealth Games and it’s impact on the

Economy of Delhi Name : Suvarun Mazumder (A036)

Submitted to : Professor Sneha Thayyil

Submitted on : 28th March, 2016

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ACKNOWLEDGEMENTS

I would like to thank Mrs. Amita Vaidya (Associate Dean, SAMSOE) for providing me with

this unique and exciting opportunity to write a research paper. I would also like to thank Prof.

Sneha Thayyil, my mentor for this Research Paper for providing me with the opportunity to

work under her. Her constant guidance and inputs helped me create a viable structure for this

paper and focus on what is important. I would also like to thank Narsee Monjee Institute of

Management Studies (Sarla Anil Modi School of Economics) for providing me with the

necessary infrastructure and access to databases without which it would have been impossible

for me to complete this paper. I would also like to thank the creators of this course for giving

us the opportunity to do such a research paper and my friends for their constant support and

inputs.

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ABSTRACT:

Followers of major sporting events such as The Olympics, The World cup vouch for the fact

that these events attract millions of wealthy tourists and visitors to the host nation thus

enhancing the brand image of that particular nation and with it a lot of other economic

benefits and hence, we see countries in a cut-throat competition to bag the responsibility of

hosting these major sporting events. However, there a lot of costs attached in organising these

spectacles, the magnitude of which is so large that it is unclear whether either the short or

long-term benefits would be enough to cover these extravagant costs. The following paper

looks at both the positive and the negative impacts that the Commonwealth Games 2010 had

on the economy and the image of Delhi as a city and its ability to host an event of this

magnitude in the near future. My main focus is to study the impact of the XIX

Commonwealth games on Delhi through a thorough study of various parameters like

infrastructure investment, tourism spending, revenue receipts, employment rate, etc. in Delhi

by analysing the data for these variables after it won the bid to host the 2010 Commonwealth

games.

Keywords: brand image, economic benefits, infrastructure, magnitude, developing.

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TABLE OF CONTENTS

SL.NO PARTICULARS PAGE NO.

1. Introduction 5-8

2. Literature Review 8-29

3. Research Objectives 30

4. Data Collection 30

5. Methodology 30-33

6. Data Analysis and Inferences 33-41

7. Limitations 41

8. Conclusion 42

9. References 43-44

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INTRODUCTION

"When you bring (Euro 2012) to Poland and Ukraine you change the life for the people. You

don't change only the life for one month of football, you change the life for the people

because there is a big boost for the country".

- Michel Platini, UEFA president

CNN, December 02, 2011

Sporting mega-events such as the summer and Winter Olympic Games or soccer’s World

Cup focus the world’s attention on the region hosting the event and are highly sought-after by

cities and countries around the globe. It would not be an exaggeration to suggest that the

competition among cities and countries to host these events can often be as fierce as the

competition among the athletes on the playing field. Over the past decade or two, developing

countries have increasing thrown their hats into the ring for a chance to host these mega-

events.

Sports in this modern world have become a very passionate as well as obsessive subject to

many. In the days preceding the 2006 FIFA football world cup, the theme of football bringing

the world closer and uniting different religions was a media favourite. A lot of experts or

academicians have also concluded that religious pilgrimages of the ancient times have now

given way to modern pilgrimages to such mega-sporting spectacles like The Olympics, Asian

Games, World Cups, etc. Therefore we come to the conclusion that these mega-sporting

events have indeed become spectacles and with the power of attracting millions and billions

of viewership it can be very beneficial to the host nation and provide them with a huge

amount of exposure. However, India had not made a mark on the world as a sporting nation

barring cricket and a handful of gifted individuals. India was languishing at the bottom of the

table if one looked at the population to the medals won by that country ratio by a pretty

handsome margin. The 1982 Asian Games which also hosted by Delhi had provided a much

needed boost to sports and sporting facilities in India but we are yet to stand up to or match

the international standards and the Commonwealth games also did a good job in bridging that

gap but the permanency of the impact still remains unambiguous and therefore, some

questions need to be answered before one can come to the conclusion that such events have

positive effects on the community of the host nation. Some of the hard questions that need

answering and also the reasons why I personally want to study this topic are that is such an

enormous amount of spending justified. One must not forget that the money that goes behind

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funding these mega events is mainly procured from the public and the benefits felt and

realised should be enjoyed by all i.e. the society at large and not just by the cream of the crop

or the elite minority of the society. Other important questions that come to mind pertain to the

impact of the commonwealth games on the urban development of Delhi and if the games

would lead to unchecked and unplanned development in many sectors and if it would be

possible to sustain and maintain the infrastructural changes that happen as a result of the

Commonwealth Games. Will the stadiums and other infrastructure built prior to the games be

utilised thereafter or will they turn into “white elephants” (Chotani, 2007) i.e. these facilities

are very seldom used once the games end and end up being a long-term liability to the

economy and at the same time bear high maintenance costs.

The commonwealth games have long ended but its impact still persists. Apart from the

infrastructural and the other tangible developments seen in the economy there were also a

number of intangible aspects of the games that have not been looked into in detail and this

forms one of the main aims of my research. The brand image of Delhi as a city was given a

major boost not only in international terms but also the way in which other cities in the same

country looked at Delhi and its perception of itself as well. However, the social, political and

economic decisions that were taken in order to bring about this change in image have not

always been done with the right intention and thus I have aimed to look at how these

decisions played a major role in the lives of people belonging to different social strata’s in the

society. The commonwealth games aimed at establishing India as a growing economy in the

world and was seen by many as an economic windfall to the country in the process creating

employment and other facilities. However, a lot has been said and written about the impact of

the games not only on Delhi but on the nation as a whole, therefore, one of the main

rationale’s behind me studying this topic is whether the games were able to deliver what it

had promised to do and the different sectors it affected . Being a student of economics I will

also definitely look at the economics of the games, whether the expenditure made was

necessary or if it was wasteful lavishness and last but not the least the legacy that the games

left behind especially the social legacies (Shalini Mishra et al, May 2010).

The XIX Commonwealth Games were held in Delhi from 3-14th

of October 2010. India was

the third developing country and the second ever Asian country to host these games. The

games were graced by a total of around 6,100 athletes from 71 different commonwealth

nations challenging each other in 21 different sports and a total of 272 sporting events

(Vinayak Uppal, 2009). The efforts to transform Delhi and make it a world class city have

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been on since India won the bid to host the 19th

commonwealth games in the year 2003 and

thus, it has seen a major overhaul in its infrastructure and the various sporting facilities across

the city in the years leading up to the games.

1The main objectives of the Commonwealth games were as follows:

To deliver the best Commonwealth Games.

To build state of the art sporting and city infrastructure.

To create suitable environment and opportunities for the involvement of the

citizens in the games.

To showcase the culture and heritage of India.

To project India as an economic power and Delhi as a global destination.

To leave behind a lasting legacy.

The main objectives of my study can be listed as follows:

To find out the importance and the need of hosting these world events by developing

countries like India.

The amount of investments that were made for the CWG 2010 and the type of

development that Delhi saw in its different sectors owing to the Commonwealth

games.

The effect that these games have on tourism and tourism expenditure in the city and

its impact on the Brand image of Delhi.

To find out if everything that had been promised by the organising committee were

delivered or were they irrational and false claims made by them and to study the

economics of the games alongside thereby, gauging whether the huge costs borne by

the nation was meaningful or was it a “wasteful extravagance” (Miloon Kothari et

all, 2010).

The legacy that the games left behind on Delhi especially the social legacy and

whether it was positive or negative in this case.

1 A report on the preparedness for the XIX Commonwealth games 2010, SAIINDIAN.gov.in,

Comptroller and auditor general of India, 2010.

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To briefly study the social and economic impacts of hosting mega-sporting events on

other developing countries namely The 2014 FIFA World cup held in Brazil and try to

draw a similarity with India when it comes to the impact of hosting such events on the

economy of the developing country.

LITERATURE REVIEW

The first objective that I go on fulfilling through my study is to find out the need for

hosting these mega sporting events and why countries especially the developing ones

compete vigorously to bag the responsibility of hosting these games.

“2010 Commonwealth Games in Delhi: How much does national prestige cost”, a book

by Supriya Chotani tells us that much like the other mega sporting events the CWG is an

eye-catching event to host. There are a number of eager nations waiting to pounce upon the

opportunity to host these games as it is seen by them as a matter of ‘national honour’ for

being in the international spotlight for a fortnight. Some of the main reasons or pointers

suggested in the paper hosting these games are:

These games are responsible in creating and re-distributing millions and billions of dollars

throughout the world. In the years leading up to the event, the nation sees and undergoes a lot

of major infrastructural changes for example the sporting facilities, beautification of the city,

construction of new hotels, transportation system, etc. And suppose the city gives a good

presentation of itself on course of the games then it automatically paves the way for more

future foreign direct investments into the country. It also attracts a huge base of tourists from

different parts of the world who end up spending much higher than the average per capita

consumption of the citizens.

There is a massive inflow of cash or revenue from the advertising campaigns that are

churned out by the companies wanting to get their services or products across to the large

customer base worldwide created due to the games.

The games help the city enjoy a worldwide experience and are an important catalyst in

shooting the city into the international limelight resulting in economic gains. The

commonwealth games has athletes and officials hailing from around 70 different nations

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competing against each other and these 70 nations approximately make up 30 percent of the

world population and thus the exposure that the host nation gets is immense. It also helps

create a legacy and it is very important for the city to sustain that legacy that it has created

through delivering these games. It helps the country gain international recognition.

The games also bring about an urban re-development of the host nations as we will see in

the case of New Delhi and it helps create a brand image of the city through development that

makes it a potential destination for foreign investments and also changes the city’s perception

of itself.

“Mega-sporting Events in Developing Nations: Playing the way to prosperity?” a paper

by Victor A. Matheson and Robert A. Baade states that one of the most important reasons

behind the quest to hold these events lies in the fact that it brings about an economic windfall

and the huge monetary rewards attached in doing so. This particular paper throws light on

this matter using the examples of the Summer Olympics held in Los Angeles in 1984 and

Atlanta 1996 as well as the Football world cups held in the USA in 1994 and 2002 co-hosted

by Japan and south Korea (Matheson and Baade 2003) and how hosting these events

enhanced their international reputation and spurred the respective economies on. Other than

this economic motivation the other factors that play a vital role are the opportunities for

prestige and the chance to make a mark on the international circuit as a flourishing economy.

“The 2010 commonwealth Games: Whose Wealth? Whose Commons?” by Shalini

Mishra, Shivani Chaudhary and Miloon Kothari, MAY 2010 mainly focuses on four

main findings namely 1) India’s bid for the 2010 games: whether it was justified. 2) If all the

promises made prior to the games were fulfilled or not 3) the economics side of the story:

Whether the expenditure was justified or not and lastly the legacy that the games left behind.

Now, specifically adhering to my objective I analyse why India wanted to host these games.

The first claim made by India was that hosting an event of this magnitude would help inject a

sports culture in the young generation and the exposure and experience received will help in

advancements in the sports scenario in India.

“2Hosting the Commonwealth Games will inculcate a sports culture in the Indian youth.

“… The Commonwealth Games would definitely transform the sports scenario not only in

India, but in fact in the entire region.”

2 “2010 Commonwealth games: Whose wealth? Whose commons?” Shalini mishra, 2010

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Other claims that were made by India were that the Asian games, 1982 hosted by Delhi had

been “the crowning jewel” in its history and the city underwent a massive overhaul procedure

and we hoped that the commonwealth games would do the same. And also, that developing

countries like India should be given an equal opportunity like all the other industrialised

countries to host an event of such stature if the Games are meant to be all encompassing.

The next objective I will address is the costs incurred by the nation and the physical as

well as intangible developments that were seen in the Capital before and during the

Games.

The main areas that were impacted in terms of investment and development are:

A. INFRASTRUCTURE

B. EMPLOYMENT

INFRASTRUCTURE

The main objectives under infrastructure are as follows and all infrastructure projects and

activities undertaken can be classified under one of the following:

1. Stadiums

2. Games Village

3. Transport Sector

4. Urban Infrastructure

5. Make Delhi “World Class”

1. New Stadiums

The main developments were construction of stadiums/sporting venues and up gradation of

the existing ones.

The Delhi Development Authority (DDA) planned new sporting venues, five new outdoor

stadia and two indoor stadiums. Major ones being:

- Jawaharlal Nehru Stadium

- Indira Gandhi Stadium

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- Dr. Shyama Prasad Mukherjee Swimming Pool Complex

- Major Dhyanchand National Stadium

- Dr. Karni Singh Shooting Range

Land measuring 40000 sq m was earmarked for the same.

Land for two indoor and one outdoor stadium, was provided by the state government free of

cost.

26 new training venues were constructed and 16 training venues upgraded.

The sports complexes built for the 1982 Asian Games were upgraded, including the

Jawaharlal Nehru Stadium Sports Complex that would be used for opening and closing

ceremonies.

The investments made for the construction of the above mentioned venues is depicted in

tables below.

India’s Bid Document budgeted an additional US$16.7 million (Rs. 75.2

crore) for purchase of technical equipment.

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Source: India’s official bid document for the commonwealth games

The total expenditure on stadiums and training centers was estimated at Rs.

3,389.4 crore along with Rs. 42 crore consultancy fees. This is more than a

2,160% increase from the original estimate.

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The cost of construction and renovation of five major stadiums was reported to

have shot up by almost 250 per cent of the original estimate.

2. Games Village

The Commonwealth Games Village, (a state-of-the-art village with two zones, a residential

area and an area for training facilities) with 1,168 apartments, was built on a PPP model

between Emaar MGF and DDA. They won the bid to develop the 118-acre residential project

at Rs. 321 crore against a reserve price of Rs. 300 crore. (Commonwealth games village,

High level committee for commonwealth games, 2010)

Eventually the Commonwealth Games Village was constructed at a cost of US $230.7 million

(Rs. 1038 crore). But the 2009 financial crisis and realty slump meant the company couldn't

find buyers (for apartments) and raise money. It had to ask DDA for a bail out. In May 2009,

DDA announced a Rs. 700 crore bailout package for Emaar MGF, the first such government

bailout for a realty company. (The report of the Commonwealth Games Evaluation

Commission for the 2010 Commonwealth Games, 2010)

3. Transport Sector

Airports

The Delhi Government modernized and privatized the international airport. ‘According to

GMR-Fraport, the successful bidders for revamping Delhi airport, the new airport will be

able to handle 80 million passengers a year by 2021, as compared to 12.8 million passengers

in 2004-05.’ (Chotani, 2007)

A “green helipad,” the country’s first ever, is to be built at the Commonwealth Games

Village at a cost of Rs. 1.92 crore. (Miloon Kothari et al, 2010)

Roads and Railways

The renovation of Old Delhi Railway Station has cost Rs. 7 crore. (Shalini Mishra, Shivani

Chaudhry and Miloon Kothari, 2010)

A third ring road was constructed to provide access to the Commonwealth Games Village site

and was built at a cost of Rs 3,600 crores. (Chotani, 2007)

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A 200 m long carriageway with tunnel was built, connecting the Games Village to the

Jawaharlal Nehru Stadium. It runs from the Nizamuddin Bridge to Subj Burj (Lodi road).

(Chotani, 2007)

Buses

About 1,100 shuttle buses (800 non a/c, 200 a/c and 100a/c mini buses) were to link the

hotels, tourist spots, stadia and airport. All buses had Automatic Vehicle Tracking System,

not only to track their location and speed but also the missed trips. (Chotani, 2007)

Flyovers

There was to be construction of 40 new flyovers before 2009 to improve traffic circulation.

(Anurupa.B.Singh, 2007)

The tables below summarize the approximate investments into each area under the transport

sector:

Source: 2010 commonwealth games: How much does national prestige cost?

4. Urban Infrastructure

Health and Sanitation

The Health Department constructed a sports specialty hospital near the Games Village with

network connectivity to super specialty hospitals and underlined the need for placing 50 new

high-tech ambulances near different venues of the Games. Cost estimates for the same are

depicted below.

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Source: ‘Common ‘wealth’ agenda’, The Pioneer, April 28, 2006, New Delhi edition

‘Eight projects to beautify Delhi before Commonwealth Games’

Power

To meet power requirements for the event, Delhi commissioned a 350 MW gas based power

project at an estimated cost of Rs.13 billion and decided to purchase 4,387.17 square meters

land from the Delhi Development Authority (DDA) for Rs 15.5 million towards building a 66

KV grid sub-station at Uttam Nagar. The Delhi government also allowed private companies

to set up a 1,000 MW power plant in Bawana.

The first "green" power grid at the Games Village was built at a cost of Rs. 40 crore. (“2010

Commonwealth games: How much does national prestige cost?” supriya chotani, 2007)

Water

The Delhi Jal Board undertook two new initiatives:

- boost water supply from 670 million gallons per day (MGD) to 941 MGD.61

- Build a 5.3 million euros (Rs. 33 crore) water treatment plant for the Games Village.

The budget for upgrading water supply and sewerage facilities was Rs. 40 crores.

Source: Supriya Chotani, Hazards centre, 2007

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Hospitality

Almost 19 five-star and budget hotels were to be built before 2010.

India Tourism Development Corporation Limited’s (ITDC) renovated three state-run hotels

(Ashoka, Janpath and Samrat) and the cost for the same was Rs. 100 crore. Private hotels

were also upgraded.

The government announced a five year tax holiday for hotels coming up in the NCR before

the Games. The tax holiday was even extended subsequently.

Facilities like tourist complexes, restaurants, shopping places and recreational centres were

also invested in. During the event, arts/craft exhibition of commonwealth countries, evening

entertainment/cultural programmes, food festivals and heritage packages were organized.

5. Make Delhi “World Class”

Over and above the projects mentioned above, some projects were undertaken to make Delhi

“World Class”.

Delhi Chief Minister, Sheila Dixit, said that, 3“Delhi will become a world-class city, a

beautiful, vibrant, and organized place, which makes all of its citizens— poor, and rich—

happy and comfortable living here, and which caters to all their basic requirements of health,

education, water, power, and good roads.”3 She also assured that, “The government would

ensure world-class streetscaping and beautification around various stadiums during the

Commonwealth Games.” (Shalini Mishra et al, 2010)

- India’s Bid Document for the Games budgeted US$ 1.66 million (Rs. 7.5 crore) for

city beautification expenses.

- Delhi may not have drinking water, but athletes coming to the Commonwealth Games

will get water of “first world” standards.

- Streetscaping on Jagannath Marg costed Rs. 3.40 crore whereas the budget for

beautifying Lodhi Road was Rs. 18.55 crore. (Miloon kothari et all, 2010).

- New Delhi Municipal Council (NDMC) announced plans to plant 10 lakh plants at a

cost of Rs. 23.2 crore to add “color” to the Games. (Shalini Mishra et al, 2010).

3“The Development Game, the Yale Globalist, October 29, 2008”

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Summary of estimated investments for all infrastructure projects

undertaken for the Commonwealth Games 2010 (estimates as of 2007)

SOURCE: www.channelnewsasia.com, Billion-dollar Commonwealth Games has India's

sports minister fuming, 2006

All these measures, however, are not likely to yield enough revenues immediately to bear the

total costs of the Games, which has almost tripled. In other words to cover the total costs of

the Games there is going to be significant borrowing from public funds, the market, and

financial institutions. And as with the costs, it is unlikely that these borrowings would be

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made public, due to the massive government and media propaganda of acclaiming the event

as a “national” victory of sorts. This, as we shall see later is fairly typical of the organization

of such mega events, whose consequence is years of locked up investments, low returns, and

long-term debts – all of which have to be eventually paid for by the citizens through

increased taxes, prices, and cesses.

Next up is the impact that the games had on the tourism in the city and the brand

image of the city of Delhi.

‘Commonwealth games and the Economy, Institute of international trade’ portrays the

benefits that the games have on the economy and one of them is the impact on tourism in the

country. It helps attract people from both within the same nation from around different parts

of the country and from around the world. Visitors include the participants as well as the

millions that flock to the host nation from different parts of the world attracted by the

promotion of the city and the competition of course. The increased tourism seen during the

games makes way for an increase in revenue as the tourists spend money on food,

accommodation, tickets for the games, transport, etc.

“XIX COMMONWEALTH GAMES AND ITS IMPACT ON TOURISM” by Shweta

Mishra, 2011 looks at the increase in foreign tourists during the course of the games, the

increase in foreign external earnings as a result of the spending by the tourists and the

different infrastructure and residential arrangements made for them. India recorded an

increase in the foreign earnings from Rs. 54960 Crores in the year to 64890 Crores in 2010, a

growth of around 18%. There was a growth of around 8% in the total tourist arrivals during

the year of the games. When the games were on, the Delhi airport witnessed a total of around

75,000 foreign visitors. The following table showcases a breakup of the same:

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Source: Bureau of Immigration, India.

Another positive change that the city underwent owing to so many foreign visitors embarking

on the country was the overhauling of the numerous monuments that Delhi houses. The

archaeological Survey of India spent around Rs. 25.73 Crores behind the same

(Commonwealth games 2010: Conservation, restoration, up gradation of public

amenities at protected monuments, archaeological survey of India, 2006). The

government had also allocated around 25% of its budget for the transport sector constructing

roads, flyovers, and the Metro rail system to ensure the smooth movement of the tourists.

The next objective is to find out whether the claims made by the organising

committee of CWG 2010 were actually delivered or were they false claims and to

also look at the economics of the games and deducing whether incurring such

huge costs by a developing nation was a good decision?

“The 2010 Commonwealth Games: Whose Wealth? Whose Commons?” a paper by

Shalini Mishra et al, 2010 looks at the claims made by the organising committee prior to

the games and if they were delivered. The claims if placed under four main heads are 1)

the promise to improve infrastructure of the city 2) The promise of creating employment

3) the promise of tourism development coupled with the claim of making the city of Delhi

more visually attractive. To sum all the four claims made by the committee and what

happened in reality we start with infrastructural development.

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1. The much talked about infrastructural development has been far too expensive

overshooting the budget by an enormous margin, not systematically planned,

development has been rushed and there have been cases of exploitation of

workers.

Source: India’s bid document for the commonwealth games

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The table above shows a budget estimate of around 238 crore rupees whereas the actual

expenditure on stadiums and training centres was around 3390 crore, an increase of around

2160% from the original estimate. (Delhi 2010 commonwealth games, Bid document,

Indian Olympic association, 2003).

2. The promise of creating around 2.5 million jobs was way off the mark. Research

has shown that there is an immense loss in livelihood due to displacement of

people arising due to destruction of slums and the number of jobs created is

“ridiculously low” (Shivani chaudhary, 2010) when compared to the amount of

money invested in these mega sporting events.

3. The Ministry of tourism had estimated that 100,000 tourists were expected to visit

Delhi for the CWG.4

However, this was an overestimation and research in this

field has revealed that the boom in tourism is only short-lived and the concept of a

tremendous increase in revenue due to tourism is highly superficial.

o 4“Commonwealth games: Whose Wealth? Whose Commons” Shivani Mishra et

al, 2014

o 4Press Information Bureau, Govt. of India, November 4, 2009, http://www.pib.nic.in

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5This trend of first inflating the number of foreign tourist arrivals and exaggerating the

impact of the event on the tourism sector and then admitting that fewer tourists (compared

to the initial forecast) are expected is part of a strategy by organisers and the host

government to “sell” the Games.

4. Last but not the least is the claim of beautification of the city of Delhi. This paper

has proven this claim wrong on account of the severe human costs of

beautification like the destruction of the slums leading to displacement and loss of

livelihood of a lot of people, confinement and arrests of “beggars” and homeless

people, inconvenience caused due to the construction work, etc.

The next objective of my study is to find out whether the commonwealth games left

a lasting legacy on the city of Delhi and I’m going to look mainly at the social

legacy that the games left behind.

“The 2010 Commonwealth Games: Whose Wealth? Whose Commons?” by Shalini

Mishra, Shivani chaudhary and Miloon Kothari, May 2010 analyses the many dimensions

of negative social legacy that these games left behind. Clearly, it was not an ideal situation

for the majority and it did more harm than good. The officials try their best to hide this trend

of “over-estimated benefits and underestimated costs of hosting,” (Harada Munchiko, March 2005).

“We will make double the money that we will spend. It is a win-win situation for the host country”

(The rediff interview, January27, 2004) were the exact words that came out of Suresh

Kalmadi’s (president, IOA) mouth but contrary to what he had said the only parties to benefit

from these games were the real estate players, Commonwealth Games federation, Tourism

sector, hospitality sector, sports infrastructure companies, etc. The Games have left a very

bitter taste in the mouths of the urban poor as there have been evictions of slum dwellers and

their homes have been demolished. Street vendors and hawkers have been displaced and with

it their livelihoods. Beggars and the homeless are being arrested to make sure Delhi is devoid of

them in the quest to “beautify” the capital. There are also evidences of rampant exploitation

of the workers in the form of low wages, lack of proper housing, hazardous working

conditions, etc.

5Mega-events and Impacts on Tourism: The Predictions and Realities of the Lillehammer

Olympics, Jon Teigland, Impact Assessment and Project Appraisal, Volume 17,Number 4,

December 1999.

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Commonwealth games and its impact on the Delhi Economy Page 23

The following table shows the situation of homelessness in Delhi in 2010:

Source: “2010 commonwealth games: Whose wealth? Whose commons?”

The following table/flowchart showcases the negative legacy that the games left behind and

the state of affairs in the different sectors in the country when it bagged the responsibility of

hosting these games.

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Commonwealth games and its impact on the Delhi Economy Page 25

Source : “2010 commonwealth games: Whose wealth? Whose commons”, 2010

Therefore, we can conclude from studying all of the above papers that the commonwealth

games 2010 did more harm than good in light of the huge opportunity cost of capital (in a

developing nation) that was invested in these games. And we come to another important

conclusion that a developing nation like India was not equipped to take on the responsibility

of hosting a sporting event of such magnitude.

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Commonwealth games and its impact on the Delhi Economy Page 26

The last objective of my study was to find out and give a brief account of the social

and economic impact of hosting the 2014 FIFA World Cup’s by Brazil and try to

draw a similarity with India.

“THE 2014 WORLD CUP IN BRAZIL: ITS LEGACY AND CHALLENGES” by

Human rights program coordinator Marilene De Paula looks at how the 2014 Fifa world cup

would enhance Brazil’s image as a nation recently marked by high rates of vilence and rising

social inequalities.

o The first thing that the paper looks at is the public debt and economics. The World

Cup was expected to inject 73.95 bn USD and also generate around 3.6 million jobs a

year. However, things did not go as planned as 12 of the host cities announced a 51%

increase in public debt.

Source: BNDES. Informe Setorial nº 29;

http://www.bndes.gov.br/SiteBNDES/export/sites/default/bndes_pt/Galerias/Arquivos/

conhecimento/setorial/Informe_29.pdf; accessed 29 August, 2014.

o The new jobs created were unsustainable thus slowing the economy down. Much like

India, it was found out that the workers were paid much less than promised with only

17% of them getting between the top wage of 520 USD and the minimum monthly

wage. This led to workers going on strike demanding the overtime pay and premium

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Commonwealth games and its impact on the Delhi Economy Page 27

rates which had been promised earlier thus eventually leading to delays in

construction. The lives of informal workers were affected severely as only a handful

of them were permitted to work near the stadiums owing to transport infrastructure

construction or refurbishment work.

o The next aspect assessed by this paper was the effect it had on tourism. Hotel

occupancy rates rose from the average rate of 61% to around 77 % on the days

preceding the world cup and on the days of the Games. Tourism was one sector which

was reported profitable during the event. Foreign tourists expressed their satisfaction

with the warm welcome that they had received. According to data released by the

Central Bank of Brazil, revenue generated by the foreign visitors shot up by 37.84%

when compared to the average revenue during the same period in the previous three

years.

o Next up are the urban transport infrastructure projects which were much needed

owing to the repeated complaints by the local commuters about the crowded and

uncomfortable trains and buses. In Fortaleza, the up gradation and transformation of

the existing rail network into a “metro standard” system cost an estimated 138 million

USD. However, construction was delayed and the system could not be ready for the

games. Recife’s LRV system came into effect in June with two working stations and a

one-way system. Passengers used this line a lot to travel to the stadium, Arena

Pernambuco during the Cup. Rio de Janeiro completed its construction project, the

BRT system from the international airport to the Maracana stadium and so did the

projects in Salvador and Sau Paulo.

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Commonwealth games and its impact on the Delhi Economy Page 28

Source: http://www.portaltransparencia.gov.br/copa2014/home.seam; accessed 22

August 2014

o Stadiums built or upgraded with public funding: The total cost of upgrading or

building the venues cost around 4.2 billion USD with virtually all of it publicly

funded. But much like India there is the fear of “white elephants” (madrilène de

Paulo, 2014). Brasilia’s stadium was by far the most expensive at a cost of 730

million USD. Arena pantanal, a stadium with a capacity of 41,400 cost around 310

million USD and the stadium at Rio de Janeiro had recently been refurbishedin 2007

for a cost of around 160 million USD for the pan American games.

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Commonwealth games and its impact on the Delhi Economy Page 29

Source: http://www.portaltransparencia.gov.br/copa2014/home.seam; accessed 22 August

2014.

So, after reading papers on the 2010 World cup and its effects on Brazil I can draw

similarities between India and Brazil on grounds of unsustainable jobs or employment created

during the games and workers not getting paid as much as they’d been promised, delays in

construction, a lot of the cities ending up in debt, costs much higher than what had been

estimated, up gradation of the existing public transport system, etc.

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Commonwealth games and its impact on the Delhi Economy Page 30

Research Objectives:

The main objectives that I want to achieve through my research are as follows:

1. The effect of hosting these games on the Infrastructure of Delhi.

2. Whether these games had a positive impact on the Tourism (No. of tourist arrivals and

tourism expenditure) of the state.

3. Employment in Delhi in the years leading up to the year of the games i.e. 2010 and

post that period.

4. The main source of funding in order to successfully host this mega-event.

5. Evaluate other qualitative aspects pertaining to the Games and the effect it had on

these factors.

Data Collection:

Data for the variables mentioned above have been taken from the yearly Economic surveys of

Delhi conducted till the fiscal year 2014-15.

Website:

http://delhi.gov.in/wps/wcm/connect/doit_planning/Planning/Economic+Survey+of+Deh

li/.

Data for various other variables like the GSDP, construction spending, hotels and restaurants

and no. of foreign tourist arrivals have been extracted from the Indiastat database.

Website:

http://www.indiastat.com.ezproxy.svkm.ac.in:2048/default.aspx

The time period I’ve looked at spans from 2003-04 till 2014-15 to make sure I cover the pre-

games, period of the games and the post games phase.

Methodology:

The methodology that has been used is a simple year on year growth analysis’ of the

variables chosen to evaluate the success of these Games and graphs showing whether these

variables had a positive effect on the economy or not. The time period that I’ve looked at

spans from 2003 when Delhi won the bid to host the 2010 Commonwealth Games till 2010

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Commonwealth games and its impact on the Delhi Economy Page 31

for some variables and 2014-15 for other variables to assess the long-term impacts of these

games. The main aspects that hosting an event of such magnitude affects are the

infrastructure of the city, tourism during and post the period of the games, employment and

other factors which might not be possible to quantify.

Thus the variables used to evaluate each of the above mentioned criteria’s are:

Construction as a % of Gross state domestic product.

Revenues earned by the hotels and restaurants as a proxy variable for tourism

expenditure and the number of foreign tourist arrivals in Delhi during and post the

period of the games.

Employment rate (as a % of the total labour force) in Delhi from 2003-04 till 2014-15.

Tax and non-tax revenues as a percentage of the total revenue receipts of the

government to find out the main source of finance for these games.

Other aspects like forced evictions, displacements, exploitation of the workers, etc.

that are not quantifiable to bring out the overall effect that these Games have on the

economy as a whole.

The rationales behind choosing these particular variables to evaluate the impact are:

1. Infrastructure: Any mega-sporting event requires a large amount of sports

infrastructure adhering to very specific standards because of the wide array of sports

that are involved. For example, FIFA requires the host nation to have a minimum of

around 12 stadiums with a seating capacity of at least 40,000 (Robert Baumann et al,

2013). Each kind of sport will need a stadium of its own so hosting an event of such

magnitude in a developing country such as India is expected to incur a significant

amount of expenditure. Sporting infrastructure in India is not up to the mark and is

lacking in a lot of areas and thus, it was expected that hosting these Games would lead

to significant amount of constructions to build world-class stadiums and upgrading the

existing ones. Thus I have compared construction spending as a percentage of the

Gross state Domestic product from 2004 (the year after Delhi won the bid to host these

games) till 2010 and post 2010 to check for evidence of increased construction

expenditure.

2. Tourism and enhancing the Brand image of India: The 2010 Commonwealth

Games was expected to attract tourists from all over the world and let India enhance its

brand image as a country which could increase the number of tourists in the future if it

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Commonwealth games and its impact on the Delhi Economy Page 32

gave a good account of itself. Thus this increase in tourism would in turn increase

revenues through their expenditures. It is a fact that these mega-events result in a

significant increase in tourism expenditures but in a lot of cases the observed increases

in economic activity are overstated and fall well short of the numbers predicted by the

event organisers (Jonathan Barclay, 2012). Thus, I have looked at the number of

foreign tourist arrivals from 2007-08 till 2014-15 to check the validity of the claims

made by the organisers and I have chosen revenues from hotels and restaurants as a

proxy variable for tourism expenditure because of the unavailability of state wise data

for foreign exchange earnings to study the claims of increased tourism expenditure

during the year of the games. 3. Employment rate: Commonwealth Games 2010 was expected to create an

employment opportunity of close to around 24.7 lakh jobs. Suresh Kalmadi,

President of the IOA, is reported to have said about the Commonwealth Games,”

It’s a big business opportunity, many jobs for many young people”. (Shalini

Mishra, Shivani Chaudhry et al, 2010). Major chunk of the employment opportunities

open up in the construction, hotels and catering sectors, etc. However, mega-sporting

events in the past have shown that these numbers are over exaggerated. The Barcelona

Olympics of 1992 and the Salt Lake City Olympics of 2002 are well known examples.6

It is also said that the jobs created are temporary in nature and the number

“ridiculously low” when seen against the amount of money invested. Thus I aim to

look at the Employment rate in Delhi post 2003 till 2014-15 to establish a pattern over

this time period. 4. Main source of Funding: The total estimated cost of the games had almost tripled

and the measures taken by the organising committee would not be enough to yield

enough revenues immediately to bear these costs. Thus, there was significant amount

of borrowing from the public funds and financial institutions. This was typical of the

organisation of any other mega sporting event which leads to low returns, locked up

investments which have to be later funded by the citizens through increased taxes,

prices and cesses. Thus I’ve looked at tax and non-tax revenue as a percentage of the

total revenue receipts (which also include grants) and compared the figures for 4 years

6 2010 Commonwealth Games Delhi: How Much Does National Prestige Cost? Hazards

Centre, New Delhi, September 2007, page 38.

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Commonwealth games and its impact on the Delhi Economy Page 33

before and after the games.

5. Lastly I look at some aspects that were affected due to these games that are not

measurable for example, the loss of livelihood of a number of people due to forced

evictions and displacements without providing them with an alternate source of

shelter, exploitation of workers, etc.

Data Analysis and Inferences:

INFRASTRUCTURE: The variable chosen to evaluate this aspect is construction

spending as a % of GSDP. Data has been looked at since 2003 when Delhi won the

bid to host the Commonwealth Games. The average construction spending as a

percentage of GSDP from 2004-05 till 2010-11 (the year of the games) was around

7.83 % and the mean rate post the games was only around 3.98 % so the

constructions that happened owing to the 2010 Commonwealth Games might have

contributed to the higher share in the state domestic product. Another observation

made was that the year 2009-10 had the highest amount of construction spending of

1137243 lakh rupees in the last 10 years or so which might be because of the delayed

and hurried constructions that happened towards the end to make the venues and the

Games village ready. A report released by the Indian Government showed that 13 out

of 19 sports venues were behind schedule.7 The first stadium was handed over for

trial runs only in July 2010 when all CWG projects were to be completed by May

2009. So this increased construction spending in the year 2009-10 can be attributed to

the fact that a lot of pending work had to be put to rest.8

The following table shows the construction spending as a % of GSDP over the last 10 years

followed by a graph highlighting the same:

7 "India admits 2010 Games problems". BBC. 15 September 2009. Retrieved 23 April 2010.

8 Times of India (29 July 2010). "14 Commonwealth Games projects under CBI, CVC scanner". The Times

of India. Retrieved 1 August 2010.

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Commonwealth games and its impact on the Delhi Economy Page 34

Year State Domestic Product

2004-05 10032452

2005-06 11040607

2006-07 12407958

2007-08 13796086

2008-09 15579109

2009-10 16863753

2010-11 18076539

2011-12 19027642

2012-13 20399317

2013-14 21999111

2014-15 23802650

0

200000

400000

600000

800000

1000000

1200000

Construction Spending (in lakhs)

Construction

Year Construction As % of GSDP

2004-05 975668 9.73%

2005-06 1020341 9.24%

2006-07 1058010 8.53%

2007-08 1068129 7.74%

2008-09 1104702 7.09%

2009-10 1137243 6.74%

2010-11 1027876 5.69%

2011-12 913317 4.80%

2012-13 827790 4.06%

2013-14 785001 3.57%

2014-15 828075 3.48%

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TOURISM: The proxy variable chosen to calculate tourist expenditure is the

revenue earned through the channel of trade, hotels and restaurants. Data has again

been looked at since 2003 till 2015. The following table shows the trade, hotels and

restaurant revenues followed by a graph which shows the trend over the years.

Year Trade, Hotel and

Restaurants Growth rate over

the previous year

2004-05 2106249

2005-06 2432584 15.49%

2006-07 2670022 9.76%

2007-08 3041866 13.93%

2008-09 3013451 -0.93%

2009-10 3048900 1.18%

2010-11 3402224 11.59%

2011-12 3072978 -9.68%

2012-13 3396935 10.54%

2013-14 3684230 8.46%

2014-15 3941373 6.98%

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Commonwealth games and its impact on the Delhi Economy Page 36

Thus, from the table above we see that the trade, hotel and restaurant revenues grew by a

staggering 11.6% in the year 2010-11 as compared to the previous year which saw a very low

growth of around 1.18% preceded by the year 2008-09 which experienced a negative growth

of around 0.93%. The year of the games i.e. 2010 earned revenue of Rs. 3402224 lakh which

is the highest amount of revenue earned in the last 6 years preceding the year of the games.

The reason for this can be attributed to the increased expenditure by the tourists who were in

the city during the Commonwealth Games.

The other variable that has been looked at to evaluate the effect of the Games on tourism are

the number of foreign tourist arrivals in Delhi and a comparison has been done with the pre

and post games phase.

However, contrary to popular belief we see a fall in the tourist numbers in the years 2009-10

and 2010-11 (year of the Games). The number of foreign tourist arrivals fell by around 3.3

% to around 18.93 lakh in the year 2010 from around 19.58 lakh in the previous year. This

decrease might be because of the “crowding-out” (Jonathan Barclay, 2010) effect where

sports fans can crowd out regular visitors who would’ve visited the city in the absence of the

event. There are substantial displacement of regular visitors who are deterred by the potential

for rising prices during the games because of high demand, overcrowding and other

disruptions. For example, the 2010 Football World Cup was predicted to have 483,000

international visitors but econometrics analysis showed an increase of only 120 to 200

thousand above what would’ve been normally without the Cup. (Matheson, Peeters, and

Syzmanski, 2012).

In this case, according to a tourism ministry statement about 4 lakh foreign visitors were

expected to visit during the 2010 Commonwealth Games but the immigration authorities at

the airport reported only about 75,000 foreign tourist arrivals.

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Commonwealth games and its impact on the Delhi Economy Page 37

Year Foreign tourist arrivals (in numbers) Growth rate over the previous year

2007-08 2018848

2008-09 2339287 15.87%

2009-10 1958272 -16.29%

2010-11 1893650 -3.30%

2011-12 2159925 14.06%

2012-13 2345980 8.61%

2013-14 2301395 -1.90%

2014-15 2346724 1.97%

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EMPLOYMENT: The data for employment retrieved from the Economic Survey of

Delhi 2014-15 has been looked at since 2004 till 2014-15. The total number of

unemployed people has not gone down by a significant number in the years leading

up to the games and there is no definite trend that can be observed. However, we can

see that post the games i.e. post 2010 there has been a constant increase in the number

of unemployed people, a part of which might be because of the number of temporary

jobs created prior to the games in the construction and hotel & catering sectors which

were terminated with the conclusion of the Commonwealth Games. Thus it has been

proved that the promise of jobs and the prediction of a growth in the job market are

mostly exaggerated by the organisers of mega-events.

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Commonwealth games and its impact on the Delhi Economy Page 39

Funding for the Games: As discussed earlier the estimated cost of organising

these games had gone up by almost three times which had to be financed by

borrowing from public funds and financial institutions. Thus this would later take a

toll on the citizens through an increased tax rate, prices and cesses. From the table

below, we see an increase of around 23.34% in the percentage of share of tax

revenues of the government in total receipts in the year 2011-12 (the year post the

CWG) and the percentage share in total receipts has been high since then contributing

to above 90% of the total share.

(in Crore)

Year Tax revenue Total revenue receipts

% share of tax revenues in total receipts

2003-04 5884.17 7348.53 80.07%

2004-05 7106.13 8562.63 82.99%

2005-06 8939.28 10843.53 82.44%

2006-07 10155.8 12193.61 83.29%

2007-08 11782.8 14912.39 79.01%

2008-09 12180.7 16352.21 74.49%

2009-10 13447.86 20451.34 65.76%

2010-11 16477.75 25024.1 65.85%

2011-12 19971.67 22393.17 89.19%

2012-13 23431.52 25560.97 91.67%

2013-14 25918.69 27980.69 92.63%

2014-15 26602.34 29584.49 89.92%

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Commonwealth games and its impact on the Delhi Economy Page 40

Graph showing the increase in the share of tax revenues in total revenue receipts post

2010-11 to help finance the increased borrowing prior to the games to meet the excess

spending that had taken place.

Other Aspects: There are some other negative social legacies that the commonwealth

games left behind, most important of which were the forced evictions and the

exploitation that the workers had to face. Some of the examples of forced evictions

that can be directly attributed to the CWG-related projects are:

1. In 2004, more than 35000 families living along the banks of the Yamuna river were

evicted in order to facilitate a tourism project on land that is adjacent to the

Commonwealth Games Village9.

2. The settlements at Banuwal Nagar, Vikaspuri were demolished keeping in mind the

Commonwealth Games in the year 2006.

3. In June 2009, the Municipal Corporation of Delhi demolished a slum near the

Jawaharlal Nehru Stadium where people had been living since 1998. This was done

mainly to make way for a parking lot in view of the Commonwealth Games.

9 Swept Off the Map: Surviving Eviction and Resettlement in Delhi, Kalyani Menon Sen and Gautam Bhan,

Yoda Press, 2008.

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Commonwealth games and its impact on the Delhi Economy Page 41

4. The MCD demolished a settlement of around 350 slum houses in Kirti Nagar in 2009

and also one near Loli Colony for a parking lot for the opening and the closing

ceremony.10

These are few of the many examples of forced evictions that took place before the games in a

quest to beautify the city but the main problem lay in the fact that there were no proper

arrangements for resettlement of these people. The conditions in the areas of resettlement

were inadequate. Most of these areas were on the outskirts and the residents would not have

access to basic services and many have lost education opportunities because of relocation.11

The Delhi Chief Minister, Sheila Dixit, has acknowledged that, “We will have about 30 lakh

homeless in the city after the Games. This is a serious concern. Housing for them will be a

priority after the Games. But according to my analysis this promise was not kept.

The other negative impact left behind was blatant exploitation of the workers in the form of

low wages. For example, unskilled workers were paid Rs. 85 to 100 as against the stipulated

minimum wage of Rs. 142. They were not given any travel allowance. The wages were not

paid on time and there were improper arrangements of housing for migrant workers brought

in to work for the CWG. Workers were not given basic safety equipments, etc.

LIMITATIONS:

One of the main limitations of my study is the fact that there might be a number of factors at

work driving the increase or decrease in my variables and to attribute all the movements to

the commonwealth games would not be correct. We can only say that the games were a

significant factor contributing to the movements in these variables. Another limitation arose

while calculating the effect of the CWG on tourism expenditure. We did not have much

information if the external visitors were in the city for the games and the inclusion of all

foreign tourists visiting the city in the study may have resulted in exaggerated figures if they

were in the city for alternative reasons. There are a lot of intangible benefits that hosting

these games brings to a nation like the perceived status benefit, ‘restoration of self-pride’,

‘civic pride’, etc. which are not quantifiable and go unanalysed.

10

Waiting for Relocation, Hindustan Times, April 5, 2010. 11 Restructuring New Delhi's Urban Habitat: Building an Apartheid City? Housing and

Land Rights Network, Delhi, 2002.

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Commonwealth games and its impact on the Delhi Economy Page 42

CONCLUSION

The CWG 2010 did more harm than good to the economy of Delhi. The analysis done above

has shown the same. The promises that were made by the organisers were not fulfilled and

the numbers were exaggerated by the organisers to show themselves in good light whereas

the games were laden with delays, scandals and corruption. The benefits of hosting a mega-

sporting event are highly exaggerated whereas the numbers if studied carefully indicate that

there isn’t much of a positive impact that these games leave behind. The only parties which

benefit from these games are the construction companies and contractors, hospitality sector,

media and obviously the Commonwealth Games federation. The negative social legacies that

these games leave behind are also massive though they cannot be quantified. And lastly, as

pointed out previously too, India was probably not equipped to hold an event of this

magnitude and with the prevalent levels of poverty in the country the opportunity cost of

capital was tremendous and according to me there are other pressing issues to be addressed in

this country before they go on hosting something this big.

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