Economics of Indian Cricket, now days

     BCCI – India’s richest sporting body and world’s richest cricket board, which lures many politicians for top positions in it. As India is large market in terms of International Cricket revenue, BCCI’s opinion carry weight in ICC’s decision making process. India can decide future of International players as well as can upgrade cricket rules. ECB, Cricket Australia and BCCI are ‘Big Three’ economic players in world cricket. BCCI is independent body which does not depend on Government for its finances. BCCI has tax liability of $4.13 bn who paid only $419mn till now.

     During 2007, Indian Cricket League (ICL) a private cricket league funded by Zee Entertainment initiated in India which feared BCCI. BCCI and ICC refused to recognise ICL and BCCI decided to launch Indian Premier League in 2008 on franchise model. BCCI increased prize money of IPL and banned ICL players. BCCI put Lalit Modi in change of starting T20 of its own.

IPL conducted bidding for selling franchise of each team. Obviously, BCCI made whooping assets from IPL bidding. It is interesting to know how IPL team owners/investors earn. Revenue of the team is generated from media rights for broadcasting, sponsorships, tickets, stall rentals and prize money.

     Media rights for broadcasting IPL matched is decided by BCCI through auction process. Sony network is having worldwide broadcasting rights. Some part of revenue obtained from it goes to each team investor. Revenue earned from media rights creates maximum share of total earning around 60-70% for each team.

     Out of total revenue of the team, 10% revenue comes from match tickets. Maximum the spectators, more is the earning and good view for broadcasters. Hence team owners decides ticket rates based on standard of living of the city. Some tickets are already reserved for BCCI which BCCI can provide to VVIPs and their relatives. KKR in first season of IPL did not do well, but they were in profit due to celebrities’ presence.

     Stalls installed inside stadium for beverages, eatables also acts as an addin to team revenue. And finally the prize money 50 cr for winners. As per the rule, 50% of prize money should go to each team members.

     There are other illegal sides of earnings in IPL. Let’s not go into the details of it. We shall wait for Tuesday 14th July, probe of CSK and RR fate result to be announced by Supreme Court.

Land Bill 1894, LARR Act 2013 and Land Ordinance 2014

Century old land bill of 1894 was amended by UPA govt in 2013. It came into the action from Jan 2014. The new act was named as Land Acquisition, rehabilitation and resettlement act (2013). This act was pro- farmer and pro industrial development. Old land bill was providing monetary compensation of 1.3 times the actual land cost. Whereas LARR Act provides monetary compensation of 4 times the actual market cost in rural area and 2 times the actual market cost in urban area to the landowners. On top of it, it ensures rehabilitation and resettlement of the affected people. It also studies social impact on affected landowners.  The main fact in LARR act which I want to emphasize is it need compulsory consent from 80% landowners to handover the land to private players and 70% consent for PPP projects.

I think LARR Act ensures inclusive growth where industrialists and farmers both are concerned along with the national development. But LARR Act removed local government bodies like state government and panchayati Raj from the purview of bill, saying land deals are not concern of local bodies. During 2007 and 2009, for the construction of Yamuna Expressway, 2800 crore rupees had been spent on land. Land was being acquired with whooping rate of average 15 lakh per acre. However at International arena, as per The Financial Times, France paid average 1.09 lakhs per acre and as per US department of agriculture, US paid average 96 K per acre of land.

Reuters has reported that in 2014, LARR act is a barrier to projects worth $300 bn. Hence due to continuous lobbying by India Inc. on 31 Dec 2014, NDA government cleared an ordinance to amend LARR act by using executive powers. Ordinance defines that there would be same compensation as per LARR act but consent clause will be removed for sectors like defence and rural electrification, security, power and affordable housing. Ordinance also ensures rehabilitation and resettlement. Government will not require any consent from landowners and social impact won’t be studied for these sectors. Hence Land bill ordinance= LARR Act – (consent of landowners + social impact study).

LARR act ensures that if land is not utilised for five years, it will be returned to landowners but there is no such provision in land ordinance.

I think there should be mandatory consent because one can be removed from his home without his permission is against right to property act. Consider that you have been told to vacate the home (against your wish) as some industrialist is going to destruct it and will open shopping center over there. Although you will get 4 folds price of your home, one shop in shopping center as a part of resettlement, might be a new apartment for rehabilitation. But all this cannot make you satisfied as compared to your father’s old home (As per Amitabh Bacchan’s Binani cement Adverisement). Another example, if you have some fertile land where you are cropping every year, tomorrow industrialist came and asks you to vacate it as they want to construct vegetable market building at that place. So with this new bill they can start construction without your will.

I think there is no need of any amendment in LARR act of 2013 because it is more pro farmers than that of industrialists. If $300 bn projects are on hold, let them on hold till all landowners are agreed to sell their land which will ensure inclusive growth of India. In West Bengal communist led left government who ruled Bengal for almost 34 years adopted liberalisation policy and changed its pro farmers policy to capitalist path of industrial development which at micro level endangered food security of small and marginal farmers who formed vote bank of left front government. Eventually left government collapsed but Mamata Banarjee took over.

Alternative to the LARR act can be renting land to the industries for specific period with increasing rate of rent. This will ensure that landowner will get his land with same grace and industry will not need more initial set up charges.