The Adani-Modi Relationship
December 20, 2014
The state-owned State Bank of India’s recent $1 billion line of credit to the Adani Group for a coal mining project in Australia stirred up a hornet’s nest. The Opposition smelled a rat in the deal and attributed it to the ‘blessings’ of Prime Minister Narendra Modi on Gautam Adani – the first-generation billionaire businessman from Gujarat.
The controversy has shifted the spotlight on Adani yet again. He was very much in news when Modi used his private jets for his electrifying campaigns as the prime ministerial candidate during the last General Elections.
Adani’s Fortunes Rose Phenomenally during Modi’s Stint as Gujarat CM
The strides that the Adani group made during Modi’s chief ministership in Gujarat are very much envied by his rivals.
Figures suggest that during Modi’s tenure as CM, the group’s revenue had soared from $ 765 million in 2002 to $ 8.8 billion in March 2014. What was rather conspicuous was the amount of debt that accumulated to $13 billion on the Adani group!
This has been quite a phenomenal rise for Adani since he set up his business in Ahmedabad in 1988 (which became publicly traded in 1994) – a rather terrific achievement by someone who was arrested once in December 2002 by the Delhi Police in a Rs 5-crore cheating case; and was kidnapped for 18 hours by suspected underworld in 1997 in Ahmedabad (His family had filed no FIR then and the police said that Adani had to be “gently persuaded” to file a complaint).
More often than not, Adani’s business models have generated controversies. The latest being the Gujarat High Court declaring his Special Economic Zone as illegal earlier this year for not getting an environmental clearance. Even the Supreme Court refused to stay that decision.
Adani has Enjoyed Close Proximity to Modi
Modi does share a unique relationship with Adani. He in the past had even attended Adani’s private functions such as the marriage of his son in Goa and thereafter the reception as well, last year.
Consider these facts:
• Adani cancelled the sponsorship of a Wharton India Economic Forum event when the latter dropped a live video address by Modi last year
• Adani provided an air-conditioned tent for Modi to stage a sit in (dharna) over Narmada water issue in Ahmedabad.
• Adani not just made big investment plans in Vibrant Gujarat functions, but also lobbied for Modi abroad
• Adani cancelled the sponsorship of a Wharton India Economic Forum event when the latter dropped a live video address by Modi last year
• Adani provided an air-conditioned tent for Modi to stage a sit in (dharna) over Narmada water issue in Ahmedabad.
• Adani not just made big investment plans in Vibrant Gujarat functions, but also lobbied for Modi abroad
Adani was the only businessman apart from Anil Ambani who had made a clear pitch for Modi as the next PM.
Once Modi became the PM, Adani even accompanied him to the United Nations and Australia where he inked business deals. He now also eyes the Pakistan market for Adani Power that plans to set up a 10,000-MW thermal power plant in the Kutch region of Gujarat.
Adani was able to obtain land from the Modi-led state government for his port and special economic zone (SEZ) projects almost at throwaway price — between Re 1 and Rs 32 per square metre — which were much lower than what the other companies paid for land when they set up units in the state.
Politicians are Known for Patronising Businessmen
It may be said that crony socialism (in the pre-liberalisation days) and crony capitalism have been a harsh reality in Indian context. They have thrived because of the fact that business and politics have always had a symbiotic relationship in our country.
In the pre-liberalisation era, when license raj prevailed, government patronisation was crucial for any private business to prosper. The post-liberalisation phase too has encouraged crony capitalism and it has been a fact that seldom any government since Independence resisted creating, patronising or promoting their favourite business houses.
Capitalists such as the Birlas and the Ambanis made billions also largely because they could wield enough influence in the power of corridors in New Delhi to get their work done.
Even in states such as Uttar Pradesh and Karnataka to name a few, one could find a Subrata Roy Sahara (in Uttar Pradesh) or the Reddy brothers (in Karnataka), who grew because of their proximity to certain political class or leaders.
Adani has quickly joined their ranks. He makes no bones about the need for political patronage and was quoted as saying by Fortune in 2011 about his firm belief that “the business of infrastructure cannot be done without the blessings of the government”.
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