Ever since its independence, India has been struggling to opt for various models of growth, primarily relying on a Soviet-model left-leaning socialistic pattern, for nearly four decades. When the country only had a week’s worth of forex reserves and an economy in shambles, the need for promoting private industries became clear, and the first efforts to liberalise commerce and industries, freeing them from the clutches of the license-raj government, began. Until then, a few private industrial houses, such as Tata, Birla, and possibly Sarabhai, had complete control over every industry under the sun. Sarabhai, not having an inheritance plan in the family, lost out and wound up most of its activities.
Birla was favoured by the government, had a say in the Congress Party, and could have funded them as well. Dhirubhai Ambani, a rice seller to Iran and carpet importer, bulldozed his way into the space by politicking and patronising selected leaders to grow. Political parties endeared every business house to fighting elections, and the limitless licences at the disposal of the government helped all mining and mineral resources top the list of largesse exchanges between the government and the industry.
New sectors IT and telecom suddenly opened Pandora’s box. The success of the software exports helped other industries like auto, pharma, chemicals, and textiles piggyback on the success and grow exponentially. The cost of fighting elections grew proportionally, as did the greed of the political parties, resulting in kickbacks honourably called “quid pro quo.” Political wealth bred a new breed of greedy leaders eager to amass even more wealth, and funds earned in questionable ways had to be safeguarded and profitably reinvested. Thus came handy round-tripping from tax havens like Mauritius, etc., into the stock markets. Any effort to control them met with dangerous consequences, sinking the bourses and the Indian economy, and thus remained a bone stuck in the throat for ever.
Gautam Adani entered the big time about a decade ago as a trader and moved up the ladder in Gujarat under the patronage of the BJP government in the state. Mukesh Ambani confined himself to fewer focussed activities, shifting from textiles to petrochemicals, later setting up refineries, and also diversifying into mobile telephony. The other newcomer among the biggies was Anil Agarwal, who remained in his core area of metals and mining. JSW remained in steel, and Bharati Mittal in telecom.
Adani went ballistic by buying up distressed assets, expanding into infrastructure like sea and airports, and moving into Sri Lanka, Bangladesh, etc. There were several complaints of human resources abuse and environmental damages against the group. The group shocked the world by announcing fifty times its expenditure in relation to its profit, pledging the newly acquired shares to raise money, and redeploying the money in his group firms. Money never seemed to be in short supply, flowing in from tax havens to the group. Apparently, with a financier like Adani, the BJP never needed to get into smaller scams, thus keeping a “clean image” as compared to all other parties.
Adani called the shots; his equity was grossly overvalued, against which the banks offered more loans, and the game went on. The timing was when Adani floated a PFO offer of Rs. 20,000 crores and a US short seller released a research report, stunning all and causing a deathly silence for nearly a week in the Adani empire. Today, the darling of India’s success story, Adani, has been shunned by Credit Suisse and has been dropped from the Dow Jones exchange. The opposition is baying for the blood of the BJP and Adani’s supposed chief patron, Prime Minister Modi. The fall in his stock value is now nearly $115 billion, enough to cause deeper and longer-term damage that seems impossible to undo, despite the empty nationalistic rhetoric and fake bravado.
A few retort, comparing the growth Jeff Bezos or Elon Musk and criticize that Indian characteristically detest behemoths like Adani and Ambani, while many celebrate the fall as another victory of common man. In whichever case, due diligence was lacking, as PSU banks and LIC had lakhs of crores riding on companies like Adani, which had poor disclosures, as reports say.
The repetition of reaping profits by raping the system with the help of the government has been going on and must end. The sooner it ends the better.
Sampath Kumar
Intrépide Voix
