ADANI : THE INFALLABLE

Adani:

If India’s growth story in decades after independence was shaped by Tatas and birlas. Adani become synonymous with the wealth in 21th century. He is the one who began the year as one of the rishest man who ever lived had surged his value 2500℅ in 5 years. As he potrayed his rise, wasn’t his alone, it was inseparable from the growth story of india. He often said that his company goals were in lockstep with countries needs. In 2022 he took reliance industrie’s chairman Mukesh Ambani and China’s jackma to become worlds top three billionaires.

The journey of Adani’s growth

The journey of Adani’s growth and now his spaculated fall is a very interesting , it seems like a fiction story of a magician in a utopian world. The journey makes us realize some of the harsh realities of india’s business and political scanerio. The story of Adani gives us a taste of 2012 Daron Acemoglue and James A Robinson’s book ;WHY NATIONS FAIL :The origin of Power, prosperity and poverty. The revelation of link between business and politics could push india closer to pairing between an extractive economic institution and extractive political institution, both working for few. To understand the scanerio and link between economic and polotical world we need to look at the past happenings. At the time of independence india’s private sector was dominated by clitches of business families and it continued till the licence raj came to an end in 1991 due to LPG (liberalization, privatization, and globalization) reforms by the then congress govt. After 1990s new companies were formed. These all were firms in new sector like IT, healthcare, telicom etc. But the firms in govt heavy sector like infrastructure, stayed hand to hand with political economy and these firms supported political parties by donating them, yet some enterprises were by owned by politicians itself. Political patronage stayed opportunistic for political parties in Capative Coal Block allocation popularly known as Coalgate scam (2012) and Arunachal pradesh Hydel scam. Companies with political links got everything what they wanted and so others did. All that mattered was their willingness to pay.
Now when Adani came to the economic world india started seeing something new. The government has chosen his group as National champion and is encouraging it’s expansion. Adani companies have not just entrested with wide swathe of india’s infrastructure. They have become the first choice as partners in multi sectors. Multi sectors have always been considered as the priorities of growth for india. So by giving first priority to Adani group means that govt. wants to grow india only with the help and aid of some perticular business gaints.

Now the question is how was the group chosen as National champion? Is it right strategy for india? Election in India become very expansive for political parties and capital plays a very vital role in it. Given the financial pressure to win elections, political parties in India are turning Kleptocratic. And this is possible only with the help of links with business gaints. In return, business gaints take the advantage of links with political parties and get involved in abuse of their situation and position . In gujrat under Modi govt. Adani saw a meteroic growth. It created a world class port complex at mundra. It got govt. largesse eg SEZ came up in mundra without environmental clearance and at some instances, mundra port got more prefrance than kandala port. When Narendra Modi came to power in centre, Adani went national, as remarked by lok sabha mp, and congress leader Rahul Gandhi, in the speech of vote of thanks to president of india in lok sabha. In 2018 , Adani announced future expenditure of 167000 crore despite a net profit of 3455.34 crore. The group was highly benifitted by govt. decisions. It got a 1600MW coal fired power project at Godda, despite the fact that the company is charging higher rate than the normal. Also a renewable project was given by Gotabaya rajapaksha (pm of srilanka) to Adani on modi’s pressure. And the third most important instance, where the airport rules were changed to get Adani in to operate 6 airports. Does govt. want companies to set up factories for solar panel -Adani will oblige. Pm set a stiff renewable energy target -Adani signs up to meet. Govt. worried about self relied weaponry-Adani will create indigenous defence ecosystem under make in India. A report from morning context said that a handful of investment funds invest almost solely to Adani. Now, what would you call it when foreign funds invest their assets in a corporate group company ? NSDL (National Security Depository Ltd.) froze the accounts of 3 such funds —Albula investment fund, cresta fund and APMS Investment fund which together owe rs 43,500 crore worth of shares in 4 Adani group companies.

These funds were frozen because of insufficient disclosure of misinformation regarding benificial ownership as per the prevention of money laundering act (PMLA). Finally entered Hindenburg report on 25th january 2023,it revealed the findings of their 2 year investigation, presenting that INR 17.8 billion (Us $218 billion) indian conglomerate Adani group had engaged in brazen stock manipulation and accounting fraud since over the course of decades. The report also focused on funds I mentioned above. The report was released just ahead of ₹20000 FPO(Folow- on public offer ) by Adani groups flagship firm Adani enterprises. In a 413 page response Adani group said, “it’s not an unwarranted attack on any specific company, but calculated attack on india, the independence, the integrity and the quality of institutions and growth story ambitions of india. But Hindenburg in it’s rebuttal said that Adani didn’t address any of the substantive points that the report raised rather Adani stocked a national narrative.

The initial impact was the loss of US$100 billion. After that he called- off whole FPO and refunded the money back. S & P and Dow Jones indices, said that it will remove Adani enterprises from widely used sustainabilaty indices on February 7 -making shares less appealing to environment comscious investors. Rbi also sought details of banks about market exposure. However there is no probe on SEBI ‘s side. While this article is being written, SBI is yet to disclose it’s exposure. The opposition also became furious on the issue and started demanding (JPC) joint parliamentry committee, headed by supreme court Or monitored by CJI.

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