Issue 12

Once Upon a Time in Mumbai

Stolen cars, dirty cops, a body dumped in a creek, and India’s richest family. These may sound like the elements of a thrilling Bollywood movie, but actually form the basis of a case that gripped Mumbai earlier this year. On 25th February, a Scorpio SUV containing 20 gelatin sticks (low intensity explosives normally used for construction) was found outside Mukesh Ambani’s 26 story residence in South Mumbai. A few weeks later, the owner of the car, Mansukh Hiren, was found dead in a creek. The high ranking police officer who had been leading the case, Sachin Vaze, was arrested by India’s main counter-terrorism body (the National Investigative Agency) for his involvement in the case. Vaze, a member of the famous ‘encounter squad’ of the Mumbai police, active in the 90s and early 2000s, has been suspended from his role as Assistant Police Inspector and is currently in custody of the NIA. Once revered by the media as a top cop, every facet of his life is now under scrutiny. As things got even murkier, warring political parties BJP and Shiv Sena quickly co-opted the story to hurl accusations at the other. News media were equally fascinated, and every new twist in the tale dominated headlines and primetime debates. 

Bombay is no stranger to twisted crimes and long drawn out investigations. Nor is the involvement of police and rapid politicisation of the case a new phenomenon. The city of dreams has had its fair share of nightmares, with three horrific terror attacks that killed hundreds of people in the past thirty years. One of the main accused in the first of those attacks was Dawood Ibrahim, a notorious gang-leader and designated global terrorist. The underworld of Mumbai was his playground in the 70s and 80s, but he fled to Dubai in 1986. The pervasive presence of these gangs and the bureaucratic roadblocks surrounding legal procedures led the city police to take matters into their own hands.

In the 90s Mumbai police formed an encounter squad to deal with growing gang violence and extortion cases. The judicial process was lengthy and it could take several years for a case to even reach the court, and ‘encounters’ were seen as an effective, if slightly controversial solution. An encounter generally involved the police cornering a gangster who would then attack or try to escape, and the police would use the opportunity to shoot him dead. Sachin Vaze was one of the original members of the squad and is alleged to have been involved in the encounter killings of around 63 gangsters. However while some appreciated this quick and brutal method of delivering justice, others were horrified and questioned the legitimacy of some of these encounters. There were also rumours that the cops were trying to outshine each other, and getting involved in gang rivalries in the process. Many members of the squad were dismissed from the force but later reinstated. In 2004, Vaze was suspended and charged with murder for the custodial death of Khwaja Yunus. In 2007, he resigned when his request for reinstatement was denied by the Maharashtra government. He then joined the Shiv Sena, and was later reinstated as a cop in 2020. But things quickly went wrong just a year later, when he was named the prime suspect in the murder of Mansukh Hiren. On 11th May, Vaze was dismissed from the Mumbai Police.

The tale kept many readers hooked for months, reminiscent as it was of a good Bollywood gangster film. In fact, many famous entries in that genre were based on the lives and cases of the encounter squad. That our desire for these fast-paced and intriguing stories is now being fulfilled by the news is a worrying trend, but in a year unprecedentedly low on movie releases it perhaps makes sense. Journalist Suketu Mehta has spoken about the curiously close relationship between Hindi cinema and the underworld gangsters: “The Hindi filmmakers are fascinated by the lives of the gangsters, and draw upon them for material. The gangsters, from the shooter on the ground, to the don-in-exile at the top watch Hindi movies keenly, and model themselves, their dialogue, the way they carry themselves- on their on-screen equivalents.” 

The connection between the two worlds runs deeper still, as gangsters used to finance major Bollywood projects, and actors like Sanjay Dutt have been arrested for ties to the underworld and terrorist groups. In 2000, an assassination attempt was made on the producer Rakesh Roshan, allegedly in relation to an extortion threat made earlier. The shooting followed a string of attacks on Bollywood actors and producers. In 2001, Nazim Rizvi and Bharat Shah, producer and financier of the film Chori Chori Chupke Chupke, respectively, were arrested for aiding and abetting the don Chhota Shakeel’s activities. Preity Zinta, who starred in the film, later testified against him, saying that she had received threatening calls from the underworld. Mumbai’s underworld turned to the film industry as a target for extortion when the property business dried up in the nineties. 

If this was a mainstream movie all the loose ends would have been tied up and the good guys would emerge victorious. Unfortunately, life isn’t a movie and the difference between good and evil isn’t always clear, especially when politics enters the mix. News readers eventually moved on from the case, distracted by the ongoing pandemic and newer scandals. Sachin Vaze has been in jail since March 13, potentially wondering how he fell from grace. If we’re lucky, a biopic is already in the works.

Photo courtesy: Shambhavi Thakur, Newslaundry

Rujuta Singh is a student of Political Science, International Relations and Media Studies at Ashoka University. Some of her other interests are music, fashion and writing.

We publish all articles under a Creative Commons Attribution-Noderivatives license. This means any news organisation, blog, website, newspaper or newsletter can republish our pieces for free, provided they attribute the original source (OpenAxis).

Issue 11

Has Mercedes Slowed Down F1 Revenue Growth?

If you are unfamiliar with F1, here is a primer with all the full forms you need that will help you! Note that all $ values are in USD. (Cover Image Credits: Mercedes-AMG)

The FIA Formula One World Championship has been a temple to technology, speed, and most importantly, money, since its inception in 1950. It has been badly hit by the Covid-19 pandemic with the turnover from the WCC falling from $2.02 billion in 2019 to $1.14 billion in 2020 However, the sport’s problems with money cannot be attributed solely to the pandemic. F1 has lost 129 million viewers since 2008, resulting in sponsors losing their incentive to use F1 as a way to advertise. What is it about the sport that has led to this loss – and what implications does it hold for its future?

Sponsorships are one of the primary sources of revenue teams and the FOG, which makes viewership incredibly important. Constructors like Mercedes rarely realise a profit, instead using the sport to advertise their road cars. Due to the public nature of the sport, F1 has a very high level of technological transparency and it is difficult to hide and patent innovation in the field. The cars tend to co-evolve according to specifications described by the FIA (English: International Automobile Federation) as the diffusion of knowledge occurs through observation. To prevent the stagnation of the sport in old technology, the FIA signs the Concorde Agreement with the FOG and the constructors every 6 years or so to lay the foundation for technical development. The agreement creates a cycle in which some teams are able to develop better technologies in years subsequent to signing the agreement while other teams catch up before the next agreement. However, a crucial flaw was exposed in 2013 which (re)introduced the era of the 1.6-litre V6 turbocharged hybrid engines put in place in an effort to be sustainable (Motor racing! Sustainable! Ha!). Mercedes developed a ‘monster’ of an engine that was so powerful that it left the other cars unable to offer any competition. 

Many fans have emphasized that one of the worst problems F1 faces is the lack of competitiveness on the track. The uncertainty of outcome (UoO) theory was put forth by Rottenberg in 1956, and it propounds that, ceteris paribus, the demand to watch a sport is directly proportional to the uncertainty of the outcome of the sport. Other academics have related this principle to F1 citing that a balance between the level of performance or a ‘competitive balance’ must be maintained between teams to maintain the uncertainty of outcome. 

Several empirical studies have concluded the significance of technical specifications of each car, funding from sponsors and investors, the drivers, the crews, and the suppliers as some factors that contribute to the outcome of the championship. When these factors interact to create a balance in the performance of cars across the grid, a competitive balance is achieved. A lack of competitive balance tends to make races boring and predictable and discourages viewers from buying tickets, watching races, or doing anything that generates revenue for F1. The teams earn revenue from sponsors, investors, and Formula One Management (FOM) payments, and the FOM in turn, earns from GP ticket sales, hosting fees, broadcasting fees and more sponsors. Consequently, Budzinski and Feddersen outline three kinds of competitive balance that I find relevant to these revenue streams. 

The first of these is the competition within each GP as it is important for the sale of tickets and track sponsorships. As fan surveys show, tracks like Sochi are unpopular with audiences due to the high predictability of the races. As per UoO, this negatively affects the sale of tickets and per race viewership. The second involves competition within a season, which can affect the average viewership and cause sponsors to drop out due to reasons cited before. This impacts sponsorship payments to the FOM and subsequently, the payout teams receive from the FOM at the end of the season. The third kind of competition, that which exists over seasons, largely influences the number of viewers of the sport, as a new viewer is only enticed to begin watching a sport when it is entertaining, and it is entertaining only when there is an uncertainty of outcome. For example, a viewer that has seen or heard of Mercedes dominate F1 for six years is unlikely to expect something different to happen in the seventh, discouraging them from watching the season at all. 

The question remains, what exactly is causing the gap in performance? Many attribute it to the gap in budgets as some teams receive bonuses from the FOM that are not directly related to their performance in the championship, making their funding considerably bigger. To address the same, budget caps of $175 million and $145 million have been placed on the development of technology in 2021 and 2022 respectively.

Considering the budget cap and assuming a utopian clean slate, we can say that the factors influencing the championship would be driver ability and any differences caused by technological innovation. However, a clean slate is an assumption one cannot afford to make. In 2013, Mercedes started with the best car on the grid, a good crew, good drivers, and good suppliers, which gave them good results. Before the next season started, they were able to build on their already dominant car while other teams struggled to catch up. Their good results attracted sponsors and investors who funded R&D and allowed them to hire better crew and better suppliers who were more willing to associate with a successful team. This propelled them forward and helped them produce even better results.

Conversely Williams Racing and Haas F1 had a string of bad seasons due to poor cost management and developmental barriers, which caused a struggle to find good drivers and sponsors. This is clear with Haas making a bizarre move by employing Nikita Mazepin, an arguably average F2 driver. The struggle to find a good sponsor is evident when one learns that Uralkali, Haas’ new title sponsor, just happens to be owned by parent company Uralchem in which Dmitry Mazepin, Nikita’s father, has a majority stake. 

Positive feedback loops keep old and rich teams dominant while causing poorer and newer teams to toe the line of bankruptcy as the benefits of good results and the damage of bad results accrue over time. So the task at hand for the FIA is not to ensure the equal distribution of opportunities to develop new technologies – regulations and policy already do that – but to ensure that the gap between the teams does not get wider.  

The Mercedes dominance has revealed shortcomings of F1 regulations that threaten to topple the sports’ promise of being the frontline of innovation as well as the financial foundation that it is built on. As the competitive balance between teams reduces and the uncertainty of outcome decreases, F1 stands to lose its major sources of revenue and audience, which is already steadily decreasing. By placing budget caps and testing restrictions (see picture) on teams, measures have been undertaken to ensure that this does not happen, but only the upcoming seasons will tell whether or not it has been effective.

Kavya Satish is a second-year Economics and Finance student at Ashoka University.

We publish all articles under a Creative Commons Attribution-Noderivatives license. This means any news organisation, blog, website, newspaper or newsletter can republish our pieces for free, provided they attribute the original source (OpenAxis).

Issue 11

E-commerce Platforms and The Continued Mistreatment of Delivery Personnel

With tech giant Amazon being involved in a slew of Twitter battles over the past week, it has unravelled multiple issues which demand immediate attention. In a bitter response to Senator Elizabeth Warren’s tweet that accused Amazon of using “armies of lawyers and lobbyists” to evade taxes, the Amazon News account was quick to respond with jabs at the senator. 

Dave Clark, CEO of Amazon’s consumer operations, responded in a similar fashion to Bernie Sanders’ visit to Bessemer to support the workers’ union drive. Sanders didn’t reply to the tweets directed at him, but Rep. Mark Pocan, a Democrat from Wisconsin, responded by charging Amazon with union-busting and worker mistreatment. Pocan pointed out reports that workers had to pee in bottles to keep up with their workloads.

While the battle ended in an apology from Amazon, the fashion in which the corporation took digs at these politicians was “uncharacteristically spiteful and petty”. This raises questions about how powerful these big corporations are, and their ability to openly suppress looming complications surrounding workers’ mistreatment and tax evasion.

However, workers and unions across the world are protesting relentlessly for their rights, leaving Amazon no choice but to shift priorities from winning Twitter battles to taking serious action on the ground. Whether it is workers in the USA, Italy, Germany or India, they have all demanded better working conditions, which they claimed have worsened over the course of the pandemic.

Indian Federation of App-based Transport (IFAT) workers said in a press note released on Wednesday that delivery staff of Amazon were making around INR 20,000 a month before the national lockdown last year, but that earning has now dropped to INR 10,000 following updated payment structures, which pay them INR 15 per delivery as opposed to the previous commission of INR 35.

In Bengaluru, a few delivery partners reported that they were not given protective equipment like masks, during the pandemic. Balaji (name changed), a 26-year-old delivery partner for Amazon, says “Amazon has not given me a single mask or sanitiser this year. I had to buy the mask myself. Doing work for them is very risky.” Meanwhile, Amazon continued to express how they “prioritise the health and safety of [their] delivery partners.”

However, these issues regarding workers’ mistreatment are affecting delivery personnel across firms. As acknowledged by Amazon in their recent blog post which was a response to Rep. Pocan, they mentioned how poor working conditions are “a long-standing, industry-wide issue” which are “not specific to Amazon”.

“Before the lockdown, I would earn around Rs 900 a day, by delivering about 60 parcels. During the lockdown, I earned nothing,” said Ramesh (name changed), a 40-year-old ‘delivery partner’ for Myntra. Unfortunately, Ramesh reflects the story of several delivery workers across India, who have faced severe income losses after the COVID-19 lockdown in March of 2020.

Since most of these delivery workers are ‘independent contractors’ who work for digital platforms like Amazon, Myntra and Swiggy, they are legally not considered as employees of the firms. They are not entitled to minimum wages and other benefits like insurance and pension which are offered to workers within the firms. Over these stated concerns, delivery workers like Ramesh have to pay for fuel and bike repair costs out of their own pockets, pulling down their actual incomes below minimum wage. According to a recent study by the National Law School of India University, this figure stands at Rs 65.80 per hour in Karnataka.

Bhavani Seetharaman, a policy researcher studying labour and technology, explains how the protests by Zomato workers in Bengaluru, in September 2019, successfully brought this issue to the state’s notice. “These protests specifically led to the labour department in Karnataka attempting to create legislation for gig workers in the state.” The issues covered under the legislation include health insurance in the event of accidents and fair wages. 

Seetharaman continues, “While this was the start of a much-needed legislation, post the pandemic these dialogues have stopped.” 

Needless to say, post the pandemic is when this legislation was needed the most. 

Ajit (name changed), a 36-year-old delivery partner for Swiggy, points out how Swiggy has reduced the per-delivery rate since March. “Earlier, I used to get Rs 15 per delivery, and now I get paid Rs 12.” He explains how this change has immensely impacted his finances. “I can’t afford to pay for my children’s school fees this year. It doesn’t make sense to pay Rs 3000 for 4 hours of online class a month, when we need that money for food and rent.”

When workers try and speak up about such issues, they face harsh consequences from their employers. Ramesh explains, “Myntra has cut the per-delivery rate from Rs 15 to Rs 11 this year. When some workers tried to complain about this [to their managers], they were assigned fewer deliveries in a day. Few others were even fired.” This points towards a larger issue of lack of agency, that most gig workers are subjected to. 

While the platforms tout delivery work as ‘flexible’, implying that their ‘delivery partners’ can choose the number of hours they work, this is often not the case. Ramesh continues, “The per-delivery rates are so low, we are forced to accept any and all orders that we are assigned, at any time of the day.” Despite this, Ramesh still falls short of the income needed to pay rent and other utilities. This has led him to take up a second job as a delivery partner for Amazon.

The platforms also deny their delivery partners other benefits like health insurance and pension. While Swiggy has promised insurance to its workers in case they test positive for COVID-19, Ramesh seems sceptical. “We did not sign any contract for this, nor were we told about how much money we would get [in the event of testing positive for COVID-19.]” 

To address these issues, Seetharaman says that the way forward is “To define gig workers as workers of the formal economy.” This would give them the same protections as workers in other sectors, such as minimum wages and health insurance.

She points out that the recent Code on Social Security is a starting point for such legislation. This is because it has at least begun to define gig workers, and discuss their need for social securities. However, the Code does not make it compulsory for platforms to provide these social securities to their workers.

As the size of the gig economy (delivery services) continues to increase during the pandemic, and cases of wage slashing continue, there is an imminent need for stronger labour legislation. As Ramesh puts it, “Without us [delivery workers], these companies cannot continue to function. How is it fair that they get richer this year, while we struggle to survive?”

Image credits: Forbes

Samyukta is a student of Economics, Finance and Media Studies at Ashoka University. In her free time, she enjoys discovering interesting long-form reads and exploring new board games.

Rohan Pai is a Politics, Philosophy and Economics major at Ashoka University. In his free time, you’ll find him singing for a band, producing music and video content.

We publish all articles under a Creative Commons Attribution-Noderivatives license. This means any news organisation, blog, website, newspaper or newsletter can republish our pieces for free, provided they attribute the original source (OpenAxis).