Problems with the Commonwealth Games are projected to inflict a major financial hit on tourism and investment in India over the next three years.
Games mismanagement estimated to cost India $90bn
The chaotic preparations for the Commonwealth Games could cost the Indian economy as much as US$90 billion (Dh330.1bn) of growth over the next three years, an independent think tank has said.
“Large-scale business and investment decisions in boardrooms will certainly be impacted by this colossal display of ineptitude in managing a large project,” said Robinder Sachdev, the president of the New Delhi-based Imagindia.
Mr Sachdev said Imagindia used the six-sigma management model, which has been adopted by many large companies, to assume a loss “in India’s quality and project management assurance, and this translates to almost $90bn over next three years, beyond which we assume this fiasco will be forgotten”.
The estimate comes on the heels of a similar report by Moody’s Analytics, the research arm of the ratings giant Moody’s, which said that “confidence in India’s infrastructure, its capacity to organise large events, and its reputation as a tourist destination have all been brought into question”.
“The negative publicity could deter foreign investment and give multinational businesses considering expanding in India reason to think twice,” said Matt Robinson, the senior economic analyst at Moody’s Analytics.
The potentially grim picture of India’s economic prospects started to emerge as the Indian capital is set to kick off the Games tomorrow.
India, Asia’s third largest economy, intends to attract foreign direct investment totalling $100bn by 2017, so the perceptions of potential foreign investors is significant.
India’s GDP at the end of the financial year 2008-2009 stood at US$1.25 trillion.
The negative image will hurt “Brand India” in the long term, says Dipankar Dasgupta, a former professor of economics at the Indian Statistical Institute.
“The disaster comes at a time when we are making every effort to project ‘Shining India’, which boasts almost nine per cent economic growth. But the real picture of the country reeling in corruption will scare away potential foreign investors,” Mr Dasgupta said.
Manmohan Singh, India’s prime minister, wants to tap private financing for at least half of the $1 trillion India needs to develop infrastructure such as roads, airports, ports and utilities, by 2017.
Government officials were not available for comment, but Bloomberg news agency quoted Anand Sharma, the minister of commerce and industry, as saying “there is no major project anywhere in the world which is concluded to perfection”.
The senior opposition Bharatiya Janata Party legislator, Ravi Shankar Prasad, said that at the moment the Games were the sole concern for the country. “The Games ought to be held,” Mr Prasad said.
Mr Sachdev said the country’s business interests will suffer in three major areas, namely foreign direct investment, service contracts and manufacturing contracts, considering that it “conveys India’s project management failure”.