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Why India Spends So Little in Olympic Sports?

Editor, TRANSFIN
Aug 9, 2021 10:05 AM 5 min read
Editorial

The remarkable turnaround in India's Hockey fortunes at Tokyo Olympics and the spellbinding show in men's javelin event has caught the entire nation by surprise and joy. 

The men's team's bronze medal victory and the women team's qualification into semi-finals has not only led to widespread acclaim for the athletes but also for the investors in the sport, most prominently the Government of Odisha and its Chief Minister whom some have hailed as the "most successful venture capitalist of the year" for his financial backing of both the hockey teams. 

The victories may be new but the debate over India's lacklustre performance at the Olympics stemming chiefly on account of its heavily under-funded sporting infrastructure is one that is decades old. 

Today, we dive into more details of sporting finances in India, particularly the wide gaps in sporting investment between India and other countries in the world. 

Cricket Plus One 

For all intents and purposes, we exclude cricket from the list of under-funded sports in India looking at BCCI's colossal ₹14,489cr ($1.9bn) valuation. In fact, most cricketers in India are rich enough to fund a whole gamut of startups (which they do, as a matter of fact).

Let's consider hockey instead, the national sport of India. With the failures of national teams to qualify for the Beijing Olympics, the support for field Hockey in India (financial and otherwise) had hit rock bottom. The gradual revival from there involved concerted long-term investments, state support and infrastructure. 

The organisation of Hockey India League (HIL) played an important role as well. It drew up corporate investments (from the likes of Jaypee, IDCO, Wave Group, MCL etc.), set up a franchise-based contest gaining wider appeal and audiences and attracted foreign players and coaches which aided in domestic talent building.

Unfortunately, the budding investment flurry eventually faded away and the league was shut down as franchises ran out of cash. But instead of fading into oblivion, the HIL left an important legacy by capturing a level of mainstream attention that was too significant to ignore. Investors like Cairn and the Odisha government maintained their financial support while PSUs (like BPCL), Railways and the state Police departments reaffirmed their support by offering employment to players in the national team. 

Result: A Junior Hockey World Cup Championship in 2016 and an Olympic medal after a 41-year gap.

 

The League of Sports

Investments into hockey in India may not be as promising as cricket but it still lies way ahead of other sports. In an Olympic financial year (2020-21) the budget allocation for sports stood at ₹2,826cr ($381.8m) which was a feeble ₹50cr ($6.7m) increase from the previous year. If that wasn't embarrassing enough, consider the National Sports Development Fund which received an investment downgrade in the Olympic year (by ₹27.15cr ($3.6m)).

These budgets enable the training and development of close to 15,000 athletes every year and their reduction impacts access to quality infrastructure, equipment and other facilities which have a direct bearing on their performances. 

Agreed, the pandemic has butchered national finances across the board, driving even the popular sporting events like the Indian Premier League into scalebacks and losses. Having said that, there has been a noticeable increase in private funding and sponsorships into Olympic sports. 

Companies like Reliance Jio, Edelweiss, Amul, Tata Salt, Herbalife, Li Ning and SBJ have donated extensively to the Indian Olympic Association. In fact, individual donations to athletes have also sprung up since the run up to the Rio Olympics. But unlike contributions to Government sports funds, individual donations don't mandate public disclosure.

However, private patronage in Indian sports isn't as discernible when one looks at the CSR expenditures. Apart from a few heavy spenders like Tata, Reliance, Hindustan Zinc etc., who invest in their own sports foundations and or contribute to the national fund, the CSR spends on sports are abysmally low. Share of sports in total CSR declined from 1.59 % in 2017-18 to 1.41% in 2018-19.

 

Global Comparison

While it isn't a given that medal winnings in Olympics are always directly proportional to the sporting budget of nations, it remains a fact that countries who spend more on sports have performed historically well at Olympics. 

Take China, for instance. Following the aggressive state-sponsored performance at Beijing, the country has capitalised on the sporting infrastructure built thereon and also improved its sporting budgets periodically (6% hike in 2018) to maintain its lead among the top medal winners in the Olympics. 

The UK was reported to spend over £4.5m ($6.2m) per medal in the 2012 London Olympics. Put that against the total sum of ₹100cr ($13.5m) that the Indian Government allocated for preparation of Tokyo Olympics and one can see the difference in scales. The UK also allocates approximately ₹9,000cr ($1.2bn) annually to its sports budget, which is thrice of what India spends. 

Countries like the USA and Russia, on the other hand, have emerged from their Cold War delirium days when the state expended fiercely on sports to pump up its medal count. Today, athletes in the USA receive no government funding. The US Olympic Committee relies exclusively on income from the sale of TV broadcast rights and corporate sponsorships. It is a highly incentivised arrangement between corporate sponsors who provide coaching, housing, insurance, equipment and part-time employment to sportspersons in exchange for advertising and branding. 

In 2016, the Government combined three schemes - Rajiv Gandhi Khel Abhiyan, Urban Sports Infrastructure Scheme and the National Sports Talent Search System - to form the Khelo India programme which would fetch talent from the grassroot level. The Ministry of Youth Affairs and Sports, has consequently increased its appeals for private funding in recent years in pursuit of its target of breaking into the top 10 medal winners at the 2028 Olympics. Private funding has increased over the years but its full extent is still unclear. 

 

Why the Funding Rut?

It's interesting to note that in the same Olympic year which saw the sporting budget take a ₹50cr ($6.7m) hit also saw Khelo India receive a ₹312cr ($42.1m) hike in allocation. 

The lack of uniformity in the programmes' funding and focus could ultimately prove detrimental to sporting finances. But then, there is lack of uniformity in discipline-wise allocation as well. In the Rio Olympics, for instance, only 1.66% went to the preparation of the only two medal winners - PV Sindhu and Sakshi Mallik - whereas a sizable chunk was spent on under-performers. 

There's also a stark overcast of cricket and its distorted share of revenues and funding in the sports industry. As of April 2021, Cricket claims 87% of the total sports sponsorship pie in India. Perhaps the recent performances in Tokyo could lead the masses towards other sports in the country and merit their promotion.

The sports sector is one of the areas which could heavily benefit from the winds of privatisation gushing over the country's financial landscape. CSR spends on sports could be mandated by setting up quota limits. 

Mainstream sub sectors like manufacturing and advertising are also bound to grow through increasing demand in quality sporting goods. Fuelling this demand through funding and promotion of athletes is crucial to attracting more investments from the public. 

FIN.
 

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