Art index to help auctioneers fix base value, tell buyers where to put money

MUMBAI: The Indian Institute of Management Ahmedabad (IIMA) launched a first-of-itskind art index on Thursday. The index traces the price appreciation journey of Indian artists globally – its purpose is to help an auctioneer fix a base value of a work of art and a customer to make an informed decision before buying a canvas.

This has been a collaborative effort between IIMA and Mumbai-based Aura Art Development Pvt Ltd, an art infrastructure solutions provider and specialist in art transactions.

The joint endeavour is titled IIMA-AuraArt Indian Art Index (IAIAI). The index has been put together analysing price variations in art auctions of top 25 Indian artists across the globe between 2001-2022. IAIAI offers art enthusiasts, financiers, insurers and other stakeholders data to calculate the percentage change in the likely market price of an artwork over time.

“Unlike financial assets which are homogenous in nature, real assets such as art are heterogenous, which poses one of the primary challenges in creating a reliable index. Moreover, markets for such real assets are illiquid and thinly traded,” said professor Prashant Das, the faculty member of IIMA who developed the art index algorithm.

Das added, “The price of a work of art is determined by a combination of factors related to artists, such as representative work, primary medium, the age of the artist, popularity etc. There are also factors related to the medium used by the artist – oil, tempera, acrylic, ink, mixed, gouache and watercolour. Other determining factors are the subject, size, etc. Thus, comparing prices across artwork varying in multiple factors is fraught with cognitive errors.”

“The Indian art market, despite being at a nascent stage, is emerging as a burgeoning market, where IAIAI will play an important role,” said Rishiraj Sethi, director, Aura Art Development Pvt Ltd. The two bodies (IIMA and Aura Art) will publish quarterly price indices, updated twice a year, which will be hosted as a part of IIMA’s Misra Centre for Financial Markets and Economy, added Sethi.

Professor Errol D’Souza, director, IIMA, said art and artists exist for both appreciation as well as a significant monetary investment. “The total worth of art auctioned in India stands at nearly a hundred million dollars per year. This art price index will bring a higher degree of transparency to the realm of art investment,” he said.

Suhas Shilkar, an abstract painter, said, “This is a welcome initiative, but only time will tell if it will be successful.”

Real assets such as art are heterogenous, which pose one of the primary challenges in creating a reliable index PRASHANT DAS, Faculty member, IIMA