INDIAN MANDALA Billionaire Adani, symbol of Indian crony capitalism

It is not yet clear what will happen when financial markets stabilize after the revelations in the Hindenburg Research report. India could follow the path of South Korea, where the main economic engines are family business conglomerates. The risk of further erosion of the rule of law. Many Indians worry whether promises of new infrastructure will be fulfilled.

Milan () – Adani group companies have lost 110 billion dollars on the stock market since the publication of the Hindenburg Research report, which documented a series of alleged frauds and raised questions about the conglomerate’s level of indebtedness. In less than two weeks, the assets of Gautam Adani – who in a few years had become the richest man in Asia – also halved, staying at 61,000 million. For days, the Indian opposition led by Congress has been calling for an investigation, taking into account Adani’s close ties to Indian Prime Minister Narendra Modi and the role his companies play in the Indian economy.

Adani was born in 1962 and comes from a family of merchants. At first it was dedicated to the import and export of diamonds, an important sector for the Indian state of Gujarat, where the prime minister also hails from, and then it launched into the infrastructure sector from the 1990s onwards. According to commentators, his is a classic story of capital accumulation made possible by political connections. The relationship between the businessman and Modi, when he ruled Gujarat, was cemented after the pogroms against the Muslim community in 2002. Modi was also recently blamed for these events in a BBC documentary, which (officially, due to copyright issues) author) is now almost impossible to find on the Internet.

In those years, Adani, unlike the rest of the Indian business world, aligned with Modi and starting in the 2000s he created his own business association. Gujarat’s GDP dwarfed that of other Indian states, prompting pundits to speak of the “Gujarat model” and creating expectations that Modi, who came to power in 2014, would roll out the new doctrine throughout the country.

Said and done: from 2014 to today, Adani’s wealth has grown by 230% thanks to the privatizations implemented by the Government and the policies favorable to his group’s companies, which won many tenders for what the prime minister called the “building of the nation”.

What unites the two men, in fact, is not only a close friendship (Modi has repeatedly flown on Adani’s planes to attend his political appointments), but also a vision of intentions: both want to build a nation that can compete with the great world powers (with an eye on China, particularly). In fact, it is no coincidence that Adani called the Hindenburg Research report an attack on the entire country.

In this way, the highly decentralized Indian economy has turned increasingly towards crony capitalism, which is now showing its dark sides. Adani’s companies became leaders in key sectors for economic growth: energy production, port infrastructures (for foreign trade) and airport infrastructures (for national transport). But as he writes BloombergAdani’s businesses permeate all aspects of Indian life: “The coal that is extracted from Adani’s mines is shipped through its ports and railways, and then transported to the furnaces of its power plants. The electricity that produce flows through his transmission lines to houses built from the cement his group produced, where people cook dinner on stoves fueled by Adani gas and Adani cooking oil.No other person in modern Indian history has managed to be present in so many sectors of the economy in such a short time”.

The Hindenburg investigative group accuses Adani of inflating the value of his shares through a series of holdings linked to his family and located in tax havens. Until now, this has allowed him not only to increase her family’s assets, but above all to obtain the necessary loans and financing to invest directly in the country’s economy and carry out the projects that were to reshape the nation.

In other words, the growth driven by the dominance of the Adani group was based on a distortion and short-circuiting that tied market valuations to a patronage political relationship that favored that same superiority in the national economy.

At the moment, even if investors are reimbursed, it is not clear what impact the financial losses suffered so far will have on the Indian economy, and especially on society. India could go the way of South Korea, where the main economic drivers are large family-owned business conglomerates (such as Samsung), but it could also go the way of increasingly distorting competition and eventually eroding the rule of law and making from India an even less democratic country. It is perhaps no coincidence that one of the Adani Group’s latest acquisitions was the New Delhi TV network, causing concern among press freedom and human rights advocates.

But some analysts point out that what is now worrying many Indians – who will go to the polls in 2024 – is whether the promises made so far about the construction of roads and airports will be fulfilled.