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Adani’s demise sparks close scrutiny of Modi’s close relationship


The rapid demise of Indian billionaire Gautam Adani has sparked fresh scrutiny of the tycoon’s close ties to Indian Prime Minister Narendra Modi.

Punit Paranjpe | afp | beautiful pictures

Modi and Adani share perhaps the closest relationship a politician can have with a businessman.

Ashok Swain

Uppsala University

Hindenburg’s report has increased the focus on the billionaire tycoon’s close relationship with Modi.

“Adani has achieved this tremendous feat with the help of supporters in the government and cottage industry industry by international companies that facilitate these activities. This corruption permeates many layers of government,” the report alleges.

In a rebuttal that spanned more than 400 pages, The Adani Group denies those allegations called it a “calculated attack on India.”

The company did not respond to CNBC’s request for comment. The Prime Minister’s Office did not respond to a request for comment.

‘Co-capitalism’

According to Ashok Swain, head of peace and conflict studies at Uppsala University in Sweden, India has always struggled with “crony capitalism”, but the close relationship between Modi and Adani has “take it to the next level”.

Adani Group Saga: Challenging the Indian market

“Modi and Adani share perhaps the closest relationship a politician can have with a businessman; certainly, that has never happened in India. Their rise has come together.” Swain, a veteran observer of Indian politics, added.

Adani’s family-owned conglomerate stretches from airports and maritime gate to coal and recycled energy and more recently the media.

Milan Vaishnav, South Asia director at the Carnegie Endowment for International Peace, said India’s “chosen growth model” requires a “certain degree of crony capitalism”.

NDIA – JANUARY 18: Prime Minister Narendra Modi with Gautam Adani, chairman and founder of Adani Group, and other delegates at the Vibrant Gujarat Global Summit, at Mahatma Convention and Exhibition Center Mandir, on January 18, 2019 in Gandhinagar, India.

Hindustan Times | | beautiful pictures

Vaishnav adds that the Modi government’s industrial policy is premised on building national champions in the industry and that Adani is “the typical kid so far.”

“There is no doubt that Adani enjoys this position today at least partly because of his proximity to the prime minister, but also because of the perception that he can undertake projects on a large scale,” he said. .”

A ‘fruitful relationship’

There is no doubt that the fates of these two men are linked…

Milan Vaishnav

Carnegie Foundation for International Peace

Vaishnav notes: “The fact that Adani and Modi forged a close relationship during their years in Gujarat is an undisclosed secret.

“There is no doubt that the fortunes of these two men are linked, especially in the past few years as the government has increased capital spending as it promotes infrastructure,” he said.

Adani Group is a key player in Modi’s ambitions to turn India into a $5 trillion economy, said Alim Remtulla of Medley Advisors.

Analyst says Adani Group is a key player in Modi's drive to transform India into a $5 trillion economy

Both men embody the “Gujarat growth model,” he said, referring to embracing the close relationship between big business and the government.

“In particular, infrastructure is a key element of Modi’s nation-building plan. Adani [Group] is one of the few domestic companies that can carry out these massive infrastructure projects across the country,” Remtulla told CNCB’s “Squawk Box Asia”.

“Similarly, for Adani, he needs Modi’s tacit backing to raise funds for these capital intensive projects. So this is a long and fruitful relationship that spans decades. ,” I said.

Opposition attacks

Hindenburg’s report turned out to be a political gift to India’s opposition, which for years had turned against Modi because of his links to Adani. With national elections looming next year, opposition critics have seized on the report to attack Modi and his party.

India’s main opposition Congress Party has organize demonstrations and demanded an investigation into Hindenburg’s allegations. Opposition critics also accused the Mod government of unfairly favoring Adani’s business empire.

“The whole country has noticed the close connection between the commercial interests of the Adani Group and yours [Modi’s] eagerness to help him use government policy. The pattern is consistent across sectors from agriculture, energy to transportation,” Jairam Ramesh, secretary general of the Congress party, said in a statement. statement last week.

NEW DELHI, INDIA – FEBRUARY 7: Members of the Youth Congress of India protest against the ongoing Adani issue in front of the Life Insurance Corporation (LIC) offices at Connaught Place on February 7 2023 in New Delhi, India. (Photo courtesy of Sanchit Khanna/Hindustan Times via Getty Images)

Hindustan Times | Hindustan Times | beautiful pictures

In 2018, the The Modi government is said to have changed the rules that allowed Adani to bid — and ultimately win — to bid for six airports. It has been met with outrage amid criticism of cronyism. The government has denied those allegations.

Swain said that after Modi became prime minister, Adani continued to benefit from this relationship but on a much larger scale.

“Besides issuing permits for airports and ports, changing environmental rules for Adani’s coal mines and adjusting rules to benefit Adani’s stake in special zones,” he said. economically, Modi has helped Adani’s businesses in many ways.”

In his address to parliament last week, The prime minister appeared unfazed by the opposition’s criticism and made no mention of Adani.

I doubt that the Adani crisis will personally tarnish Modi or hinder his election prospects [ruling party] BJP.

Milan Vaishnav

Carnegie Foundation for International Peace

“The blessings of 1.4 billion countrymen are my greatest ‘suraksha kavach’,” said Modi, using a Hindi term meaning “safety shield”.

“And you can never break this shield of safety with weapons of abuse and lies,” he said, as opposition lawmakers chanted “Adani, Adani.”

Adani has denied claims he has received personal favors from Modi, calling the allegations baseless.

“Prime Minister Modi and I come from the same state. That makes me an easy target for such baseless accusations,” the tycoon said, according to a January report in India today.

“My professional success is not attributed to any individual leader but to policy and institutional reforms initiated by a number of leaders and governments over a period of more than three decades,” he said in the report.

Political damage?

Politically, observers say, it is difficult to predict the impact, if any, of the new scrutiny on the popularity of Mr. Modi and his ruling Bharatiya Janata Party.

“I doubt that the Adani crisis will personally tarnish Mr. Modi or hinder the BJP’s electoral prospects,” said Carnegie’s Vaishnav.

However, the relationship between Modi and Adani is “very long and strong” so it will be difficult for the prime minister and his party to come out of this crisis unscathed, Swain added.

“Adani’s close association with Modi has forced his supporters and Hindu nationalists of India to defend [Adani] in the past nine years. Now it won’t be easy to separate them from Adani,” he said.

“However, they will try to blame Adani’s fall on an international conspiracy against Modi,” he added.

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