Business as Usual

The scandal has laid bare the mechanics of Indian’s political economy, and Modi’s growth model that only favours the rich, mighty, and the well-connected. There is little doubt regarding Gautam Adani’s business acumen, but that was never enough to catapult him to the success that he enjoys today. Throughout his career, Gautam Adani never found it hard to win coveted government contracts. Acquiring public assets, power companies and airports was a piece of cake. During the pandemic, while his contemporaries worried about losing lots of money, Adani’s personal wealth actually increased by a whopping 44 billion dollars.

Luck, hard work, business acumen or expertise are only one aspect of Adani’s incessant winning streak. The other – more important aspect is the cosy relationship he enjoys with Modi. Hindenburg report has made it clear that Gautam Adani is the most blatant manifestation of crony capitalism, something that has become a norm in Modi’s India. This system allows the rich to get richer while keeping the poor in their place.

Crony capitalism is nothing new to India. Most of the country’s enormous wealth is concentrated in the hands of a few family-held conglomerates. According to a report published in January this year, the richest 1% of India control around 41% of its total wealth and their share in the pie is increasing every day, while the share of the rest of the population in proportionately decreasing.

The rub is that the rich have been able to accumulate so much money not through their education, ability or hard work, but through their connections with all the right people in the right places. Meanwhile, on the other side of the spectrum, the layman is grounded in a continuous struggle to eke out a living. The country is in dire need of infrastructure development. There is no decent healthcare or affordable education system for an average Indian. The resultant income gap and widely growing inequality is giving rise to many socio-economic problems.

First of all, population in rural areas is rising due to higher fertility rates in remote areas. Majority of those born in underdeveloped parts of country migrate towards cities that represent opportunities for both skilled and unskilled labour. However, cities cannot accommodate wave after wave of youngsters coming from rural areas. Hence, a widespread unemployment and more inequality.

Second, India’s rich elite are able to provide their own children with the best education. Once they have their degrees, they either move to the West where they start earning in euros, pounds and dollars, or even if they choose to stay in India, they are able to secure highly-paid jobs. Both these scenarios intensify the already-existing income equality problem.

Finally, years of influence, authority and absolute control has permanently shifted the politico-economic balance in favour of the rich. This can only be undone through comprehensive and constructive public wealth re-distribution policies. But the influential elite who control politics will never allow this to happen since it will entail relinquishing money and privileges.

The Adani episode - in its own way - is an eye opener. It has brought the question of rampant crony capitalism to the fore. Opposition parties are taking the government to task over these allegations, and especially why the regulator was restrained from acting against Adani despite many irregularities in its records.

For average middle-class Indians, however, nothing has changed. The Securities and Exchange Board of India (SEBI) has given Adani Group six months to come up with explanations against accusations of non-compliance. This time is ample enough for any news – no matter how big – to disappear from the public discourse. After that, it will be business as usual. There will be many more Adanis.