Some art buffs call it a crash, others a correction. But whichever way you look at it, one thing is clear — the go-go years of soaring art prices have come to a screeching halt.

The evidence is flying all over the place. At the Osian’s auction held in the capital on July 27 this year, artist V.S. Gaitonde’s untitled abstract work was sold for Rs 5.1 crore. But instead of calling for a toast, this had art aficionados clucking in disapproval. “It certainly deserved a better price. It should have sold for at least Rs 6.5 crore if you go by the quality of the oil on canvas,” exclaims Renu Modi, who runs the Delhi-based Gallery Espace.

Nor have auctions of Indian art works at Christie’s, Sotheby’s and Bonhams been marked by stunning prices. “The auctions at Christie’s and Sotheby’s in May were quite disappointing,” says Modi, who attended the auctions. “A few good works sold, but not at the prices they deserved,” she says.

That’s not all. Auction sales at the Mumbai-based art portal Saffronart tumbled by 10 per cent between March and June this year. That’s no cause for concern, Dinesh Vazirani, Saffronart.com’s director, says dismissively. “There has been a consolidation of prices,” he contends, highlighting the fact that the existing buyer base has been saturated and a new buyer base is being created. “This is a gestation period.”

But what is clear, though, is the fact that art prices — which had skyrocketed two years ago — are now going southwards. “At the moment, there is a 30 per cent downtrend in the market,” admits artist Anjolie Ela Menon.

NICE PRICE: (From top) Artists Jogen Chowdhury, Ganesh Pyne and Arpita Singh with her family

But in the downtrend, artists aren’t exactly hurting — it’s the art galleries that are facing lower, more realistic margins. That’s because artists often stand to gain little from hefty prices. It is usually the auction house or gallery that makes a whopping profit. Recalls Delhi-based artist Arpana Caur, “A gallery owner bought a painting from me for Rs 6 lakh saying it was for her grandson and that she would never part with it. Being the emotional kind, I didn’t haggle over the price. Within six months, I heard she had sold it for Rs 14 lakh,” she says bitterly.

Few investors in art had anticipated that the 2006 prices wouldn’t continue to climb. Last year, Tyeb Mehta’s Mahisasura went under the hammer at Christie’s in New York for a record Rs 7 crore. And as the 2006-07 prospectus of the Calcutta-based Aakriti art gallery points out, it was estimated that investment in art fetched a return of over 100 per cent versus 48.7 per cent on gold.

So what happened? Why have prices dropped? And has the art market shrunk?

Even a few months ago, paintings that carried the signature of well known artists were lapped up and dealers were buying art by the square inch. “Art was being equated to shares in the market,” says artist Ganesh Haloi. “Speculators were looking at the signature, not the work. They were going by who’s hot and who’s not.”

Art connoisseurs point out that art had become such a blue-chip commodity that investors were buying paintings without even looking at them. Calcutta-based collector Nidhi Sharma says she was disgusted at the way people were buying paintings at the Bonhams auction last year. “It was almost like they were backing a horse at the Derby,” she says. “They were hardly looking at the painting — only the name mattered.”

The summer of 2007, however, has made it clear that spiralling prices had to stop somewhere. “The dizzy growth witnessed in the market since 2004-05 could not have continued indefinitely,” says Anu Ghosh Mazumdar, Sotheby’s Indian and Southeast Asian art specialist.

In 2003, $4.5 million worth of Indian art was auctioned abroad. By 2006, the figure had shot up to a huge $170 million. “In 2006, Christie’s total sale of modern and contemporary Indian art was $42 million as against $15 million in 2005,” says Yamini Mehta, head of modern and contemporary Indian art at Christie’s, London.

“Prices had risen to irrational levels, so we were expecting this correction, which takes place every three years or so, to happen,” says Pratiti Basu Sarkar, chief administrator of CIMA art gallery in Calcutta. “That will now help separate the wheat from the chaff.”

Buyers, it seems, are already doing so. Two works by Jogen Chowdhury on display at the Sotheby’s Kolkata Museum of Modern Art (KMOMA) auction held last month underline the latest trend. While one went under the hammer for about Rs 20 lakh, the other remained unsold. On the other hand, paintings by two artists — Partha Pratim Deb and Jaya Ganguly — whose current prices in the Calcutta galleries are Rs 1.5 lakh and Rs 2.5 lakh, respectively — went for Rs 4 lakh and Rs 7-8 lakh, respectively. “This shows that buyers are doing their homework and are not just looking at art as an investment,” says Vikram Bachhawat who runs Aakriti Gallery in Calcutta.

The art community maintains that it is not unduly worried. “While investors and speculators are a necessary component of the art market and influence the price game, this present slump is a passing phase,” asserts Mumbai-based art consultant Usha Mirchandani, who runs Galerie Mirchandani and Steinruecke.

A few other developments have contributed to the state of the art mart, too. With the rupee becoming stronger against foreign currencies, foreigners who buy Indian art have to pay more for Indian art at auctions abroad. “Then there is the calibration of demand and supply of the works by some artists and of course the actions of very many speculators,” Ghosh Mazumdar points out. But she stresses that the market is still strong for art of good vintage and quality.

Art collector Prashant Tulsyan agrees. “Thanks to so much information available on artists and their works, no one is just willing to buy a work based only on a signature. And I think good works are still commanding good prices.”

Tulsyan has a point. The works of artists such as Ganesh Pyne or S.H. Raza, who are less prolific than their peers, still command hefty prices. At Saffronart’s online auction in June this year, Tyeb Mehta’s Kali fetched Rs 3.95 crore; a Raza painting crossed the Rs 2 crore mark and one by Arpita Singh crossed the Rs 1-crore figure.

What of the future? Pratiti Basu Sarkar says that more needs to be done. “Indian art has to get more serious and go beyond the art-as-an- investment angle to draw an international audience.” KMOMA, she holds, is an effort in that direction.

Clearly, there is no reason to press the panic button. The Indian art market has not shrunk. Nor has the art boom gone bust. “Eventually good works will find the right buyers,” says Modi. And the market will get stronger, especially with paintings by contemporary Indian artists such as Subodh Gupta fetching hefty prices in international auctions. Indeed, Ghosh Mazumdar is optimistic about Sotheby’s September sales. “Wait for the results before making any sweeping predictions,” she insists.

That is all that we can do now — wait for the zeroes to be reinstated on the price tags of Indian art works. After all, what goes down also comes up.