India: Democracy or Oligarchy?
Is India an oligarchy controlled by its 55 recently-minted billionaires whose wealth equals one-sixth of their country's GDP?
The answer to this question came when, as part of India's 2G scandal revelations, the Billionaire businessman Mukesh Ambani was quoted as bragging that the ruling Congress Party is "Apni Dukan" (our shop), implying that he owns the ruling party. The scandal also produced evidence of collusion of India's corporate-owned mainstream media in their deliberate attempts to impose a blackout on the whole affair until it was finally broken by the relatively obscure Open magazine.
Here's an excerpt from today's New York Times story that captures the essence of crony capitalism and the rise of Indian oligarchy as being among the world's largest:
"India’s billionaires control a considerably larger share of the national wealth than do the superrich in bigger economies like those of Germany, Britain and Japan. Among the Indian billionaires included on the most recent Forbes rich list, a majority have derived their wealth from land, natural resources or government contracts and licenses, all areas that require support from politicians."
Among India's powerful billionaires, the New York Times story particularly features Gautam Adani whose cozy relationship with Gujarat Chief Minister Narendra Modi has made him the tenth richest man in India. It says that "Mr. Adani has benefited from various governmental approvals and also bought coastal land from the Gujarat government at very low prices — in one instance paying as little as $540 an acre. Once he completed infrastructure, Mr. Adani sold land at a handsome profit to corporations locating inside the economic zone, including one parcel to Indian Oil Corporation, a state-owned firm, for $54,000 an acre."
The New York Times compares India's new billionaires with America's robber barons during the Gilded Age, a period of rapid economic growth which preceded the deep depression of 1893-1897.
The extraordinary power and influence of India's super rich has played out to the detriment of ordinary Indians who make up the world's largest population of poor, hungry, illiterate and sick people. It poses a serious challenge to India's democracy, often claimed as the world's largest, to meet the very basic needs of its people in whose name the rulers supposedly govern the country. It also raises the specter of significant social strife which could spark a bloody revolution shaking the Indian society to its core.
Back in 1988, Pakistani economist Dr. Mahbub ul Haq said that "our system has all the worst features of oligarchy and democracy put together." It now appears that India's system today is not much better than Pakistan's which has less inequality between the rich and the poor.
Related Links:
Haq's Musings
India's 2G Scandal
Bloody Revolution in India?
Is There a Threat of Oligarchy in India?
Political Patronage in Pakistan
India at Davos 2011: Story of Corruption and Governance Deficit
Challenges to Indian Democracy
India After 63 Years of Independence
The answer to this question came when, as part of India's 2G scandal revelations, the Billionaire businessman Mukesh Ambani was quoted as bragging that the ruling Congress Party is "Apni Dukan" (our shop), implying that he owns the ruling party. The scandal also produced evidence of collusion of India's corporate-owned mainstream media in their deliberate attempts to impose a blackout on the whole affair until it was finally broken by the relatively obscure Open magazine.
Here's an excerpt from today's New York Times story that captures the essence of crony capitalism and the rise of Indian oligarchy as being among the world's largest:
"India’s billionaires control a considerably larger share of the national wealth than do the superrich in bigger economies like those of Germany, Britain and Japan. Among the Indian billionaires included on the most recent Forbes rich list, a majority have derived their wealth from land, natural resources or government contracts and licenses, all areas that require support from politicians."
Among India's powerful billionaires, the New York Times story particularly features Gautam Adani whose cozy relationship with Gujarat Chief Minister Narendra Modi has made him the tenth richest man in India. It says that "Mr. Adani has benefited from various governmental approvals and also bought coastal land from the Gujarat government at very low prices — in one instance paying as little as $540 an acre. Once he completed infrastructure, Mr. Adani sold land at a handsome profit to corporations locating inside the economic zone, including one parcel to Indian Oil Corporation, a state-owned firm, for $54,000 an acre."
The New York Times compares India's new billionaires with America's robber barons during the Gilded Age, a period of rapid economic growth which preceded the deep depression of 1893-1897.
The extraordinary power and influence of India's super rich has played out to the detriment of ordinary Indians who make up the world's largest population of poor, hungry, illiterate and sick people. It poses a serious challenge to India's democracy, often claimed as the world's largest, to meet the very basic needs of its people in whose name the rulers supposedly govern the country. It also raises the specter of significant social strife which could spark a bloody revolution shaking the Indian society to its core.
Back in 1988, Pakistani economist Dr. Mahbub ul Haq said that "our system has all the worst features of oligarchy and democracy put together." It now appears that India's system today is not much better than Pakistan's which has less inequality between the rich and the poor.
Related Links:
Haq's Musings
India's 2G Scandal
Bloody Revolution in India?
Is There a Threat of Oligarchy in India?
Political Patronage in Pakistan
India at Davos 2011: Story of Corruption and Governance Deficit
Challenges to Indian Democracy
India After 63 Years of Independence
Comments
A steep rise in credit; rapid increases in house prices to levels way beyond available income; use of overvalued property as further collateral to demand additional funding from the banking system, resulting in even higher levels of debt; an increase in the amount of credit needed for the marginal growth of gross domestic product; a constrained installed capacity that yields to inflationary tensions; a labor force with double digit wage rises; limitless liquidity flowing into sectors with low productivity, such as real estate; a relaxation of the rules for granting loans; a rapid increase in corporate debt as a consequence of accelerated investment, mergers, and acquisitions, all fanned by the intoxicating feeling that demand will just keep going up; a central bank incapable of containing such a self-complacent liquidity binge, with interest rates far below those recommended by the Taylor rule; a political class living off an apparent bonanza, refusing to carry out the reforms needed to avoid disaster when the cycle eventually changes, ignoring calls for serious cutbacks in spending, or rises in taxes that could counteract the exuberance.
Spain in 2006? The U.S.? Britain? Iceland, Greece, Ireland? No. I am talking about emerging countries, in particular Brazil, Russia, India and China, the four known collectively as the BRICs. In my opinion, the BRICs are repeating many of the same errors committed by Europeans and North Americans in the lead-up to 2007, namely the following:
A housing bubble. Lax monetary policy has allowed unsubstantiated rises in the price of housing vs. available income, fuelled by bank loans....
Inflation. Savage increases in circulating capital, to keep pace with the speed of price rises, have made inflationary tensions inevitable. ....
Over-reliance on the financial sector. This results from failing to curb increasing credit penetration as a percentage of GDP, dodgy criteria for awarding loans, dubious value of collateral assets, and, in China, the increasing influence of a “shadow banking” sector.
Unprecedented widening of the inequality gap. ....
Too much investment with uncertain returns. ...
Dependence on cheap money: “The dollar is our currency, but your problem” John Connally, the U.S. treasury secretary, said to his French counterpart in 1971, just before the Bretton Woods monetary system blew up. The same is true today, The U.S. Federal Reserve’s zero rates of interest are aimed at resuscitating the American economy, but they have brought about a wave of liquidity that looks to emerging economies for profit, worsening an already delicate situation....
A steep rise in credit; rapid increases in house prices to levels way beyond available income; use of overvalued property as further collateral to demand additional funding from the banking system, resulting in even higher levels of debt; an increase in the amount of credit needed for the marginal growth of gross domestic product; a constrained installed capacity that yields to inflationary tensions; a labor force with double digit wage rises; limitless liquidity flowing into sectors with low productivity, such as real estate; a relaxation of the rules for granting loans; a rapid increase in corporate debt as a consequence of accelerated investment, mergers, and acquisitions, all fanned by the intoxicating feeling that demand will just keep going up; a central bank incapable of containing such a self-complacent liquidity binge, with interest rates far below those recommended by the Taylor rule; a political class living off an apparent bonanza, refusing to carry out the reforms needed to avoid disaster when the cycle eventually changes, ignoring calls for serious cutbacks in spending, or rises in taxes that could counteract the exuberance.
Spain in 2006? The U.S.? Britain? Iceland, Greece, Ireland? No. I am talking about emerging countries, in particular Brazil, Russia, India and China, the four known collectively as the BRICs. In my opinion, the BRICs are repeating many of the same errors committed by Europeans and North Americans in the lead-up to 2007, namely the following:
A housing bubble. Lax monetary policy has allowed unsubstantiated rises in the price of housing vs. available income, fuelled by bank loans....
Inflation. Savage increases in circulating capital, to keep pace with the speed of price rises, have made inflationary tensions inevitable. ....
Over-reliance on the financial sector. This results from failing to curb increasing credit penetration as a percentage of GDP, dodgy criteria for awarding loans, dubious value of collateral assets, and, in China, the increasing influence of a “shadow banking” sector.
Unprecedented widening of the inequality gap. ....
Too much investment with uncertain returns. ...
Dependence on cheap money: “The dollar is our currency, but your problem” John Connally, the U.S. treasury secretary, said to his French counterpart in 1971, just before the Bretton Woods monetary system blew up. The same is true today, The U.S. Federal Reserve’s zero rates of interest are aimed at resuscitating the American economy, but they have brought about a wave of liquidity that looks to emerging economies for profit, worsening an already delicate situation....
Six farmers committed suicide in Maharashtra this past week. Two landless workers yoked themselves as bullocks to plough a field whose owner could not afford the cost of getting a pair. This happens when India enters the twenty-first year of reforms which the-then finance minister Manmohan Singh had initiated to announce to the world that India was ‘wide awake’.
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Resources for development were supposed to be raised from those who have the capacity to pay. This called for an increased rate of taxation. But the ceiling of income tax has been fixed at a mere 30 per cent. Millionaires are happy with the tax, which is less than what the same class pays in developed nations. There are now as many as 59 billionaires compared to just one 20 years ago. And now the retail trade, the backbone of the lower and middle-classes, is being opened to multinationals.
The country’s economy is guided (or misguided) by the World Bank. America is its boss. US Secretary of State Hillary Clinton admitted in Chennai recently: I can tell you that we (the West) are, in fact, betting on India’s future. We are betting that the opening of India’s market to the world will produce a more prosperous India.
I don’t know about India, but America has gained a lot by selling defence equipment worth $800 billion. India’s investment is the highest from among the investors in the UK. What has it got in return is the question that people ask Manmohan Singh.
After signing the nuclear energy treaty, Washington has not implemented it because it fears India’s indemnity act does not waive off the responsibility on the suppliers of nuclear power plants. After the experience of the Bhopal gas disaster, no government at Delhi can let the suppliers run away from compensating the victims for faulty equipment.
The US did not even insulate India from the treaty by the Nuclear Suppliers Group so as not to give access to nuclear enrichment and reprocessing technology to those countries which failed to sign the Nuclear Non-Proliferation Treaty. The 2008 India-US treaty had promised New Delhi a clean waiver for India.
As for the UK, it came through the East India Company and ruled us for 150 years. Now London’s ambition is not territory but free markets. New Delhi has made all the concessions that the British industry wanted. Tariffs have been lowered for all their imports. This benefits other foreign exporters as well.
The West, particularly the UK, is interested in services and has a substantial share of them in India. Our industry is beginning to be counted. Yet it has to have foreign investment, technology and markets. But there is no word on that. British Prime Minister David Cameron and Hillary Clinton must realise that it cannot be a one-way street.
In his speech on July 24, 1991, Manmohan Singh had quoted Victor Hugo’s observation that no power on earth can stop an idea whose time has come. He said India’s time has come. Let the prime minister learn from the progress that the country has made in the last 20 years and introspect where things went wrong. Some 30 per cent Indians, according to a report which has official backing, live on less than $2 a day. Around 52 per cent of the population is said to live in poverty. Maybe India’s time has come but the idea has gone awry because it has benefitted the upper strata. The rest are still wallowing in poverty and helplessness.
MUMBAI, India — India’s wave of corruption scandals has hit yet another industry, iron ore mining, implicating companies that include the flagship of one of this nation’s richest men.
As a result of a government investigative report issued late last week, several stocks have lost value — including shares of Adani Enterprises, the biggest piece of a mining, port and power plant empire built by the billionaire Gautam S. Adani, India’s sixth-wealthiest person.
Adani Enterprises has denied wrongdoing. But it and several other big Indian companies are facing tough questions from investors and policy makers.
The 466-page report, by a former Indian Supreme Court justice who is now a public ombudsman, contends public officials and companies cheated the government of Karnataka state out of billions of dollars in royalty, tax and other payments from a lucrative domestic and foreign trade in iron ore. The ore is an important raw material for steel that has been in great demand in fast growing China and India.
“Huge bribes were paid,” said the report, written by Santosh Hegde, the former justice. “Mafia type operations were the routine practices of the day.”
Analysts say Mr. Hegde’s findings provide evidence of corruption in important parts of the Indian economy, including land and natural resources, that are still tightly controlled by politicians and corporate executives — even as other sectors, including consumer goods, banking and information technology, have become more competitive and open.
Procedurally, it is unclear what will happen next. Mr. Hegde does not have the power to prosecute the companies and individuals he accuses in his report. That is up to Karnataka’s government, which has previously played down concerns about mining, or to the judicial system.
India’s Supreme Court on Friday temporarily suspended all iron ore mining in Bellary, the region that was the main focus of the inquiry. The court in recent years has often led the charge to prosecute officials accused of corruption, and anticorruption advocates hope that it will do so in this case.
The scandal forced the chief minister of Karnataka state to resign on Sunday, although he has denied wrongdoing.
Shares of Adani Enterprises were down nearly 23 percent on Thursday and Friday, but they regained almost 9 percent on Monday.
The stock of another company implicated in the report, JSW Steel, fell more than 10 percent late last week. JSW’s shares dropped by an additional 10.3 percent on Monday, after Citigroup downgraded the stock and put a sell rating on it.
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In the case of Adani Enterprises, Mr. Hegde’s report says the company helped mining concerns export illicitly obtained iron ore to China and other countries from the port, while engaging in a systematic bribery campaign that covered virtually every level of government. He recommended that the company be “barred from participating in any future contract, grant or lease, etc. by the government.”
http://www.nytimes.com/2011/08/02/business/global/indias-iron-ore-industry-is-called-graft-ridden.html?scp=4&sq=india&st=cse
The foray into Pakistan is further proof of the increasingly important role of India’s private sector in foreign policy. India’s leaders, eager for a bigger footprint in global affairs, now aspire to a permanent seat on an expanded United Nations Security Council. But the Indian Foreign Service, though consisting of top-notch officers, is too understaffed to provide a comprehensive global presence.
To compensate, the government often relies on the private sector to serve as an intermediary abroad. India’s two leading business groups — C.I.I. (the Confederation of Indian Industry) and Ficci (the Federation of Indian Chambers of Commerce and Industry) — now have offices around the world and sponsor informal diplomatic dialogues between India and countries like Japan, China, Singapore and the United States.
http://india.blogs.nytimes.com/2012/04/02/indias-industry-helps-open-a-door-to-the-world/
Myth 1: Modi is a development man
This cannot be further from the truth. Gujarat has always been a developed state from the time it was carved out of Bombay state in 1960. Economic indicators clearly show that Gujarat under Modi has been ‘worse off’ than under previous governments (even the BJP one before him).
The fact is that foreign direct investment in Gujarat has taken a severe beating in the last few years and even local investment is far below what is being flaunted. Regarding social indicators, Gujarat fares poorly.
A UNICEF report published in 2013 says social development in the state has not kept pace with economic development; almost every second child in Gujarat under five years old is undernourished, while three quarters are anemic.
Myth 2: The Gujarat carnage is a thing of the past and Modi has been given a “clean chit”
Many believe the courts exonerated Modi of involvement in the Gujarat anti-Muslim riots in 2002. The hard facts are, however, very different. First of all, no court has given Modi a clean chit.
True, there is a Special Investigation Team (SIT) report that says there is not enough evidence against Modi.
But this has been challenged, with the petitioner Zakhia Jafri being given leave by Ahmadabad magistrates to question the merits of the SIT report in a higher court.
Raju Ramchandran, appointed by the Supreme Court as amicus curiae for many of the Gujarat riot cases, asserts that there is enough evidence to prosecute Modi on several counts with regard to the violence in 2002, in which more than 1,000 people died.
Modi has neither shown any remorse nor taken responsibility for the killing of innocent people under his watch. The least a chief minister could have been expected to do was to enforce law and order and protect the life and property of every citizen in his state. That he ignored this responsibility, there is no doubt among many. That he has denigrated minorities has been documented by the print and the electronic media.
Myth 3: Modi has “made up” with the minorities
There are some claiming to be representatives of minority Christian and Muslim communities who sing Modi’s praises.
A careful analysis indicates these people have vested interests, especially in business, and are not really interested in their community or what is happening to minorities in the country.
In 2003 Modi introduced an anti-conversion law and established rules to govern the implementation of this law in 2008.
It is perhaps one of the most draconian laws in the history of democratic India. It forbids a citizen from converting to another faith unless she/he has permission from civil authorities.
Even now, police and intelligence officers constantly visit Christian institutions and Christians in general, making all kinds of inquiries and demanding to check baptism registers and other records.
Myth 4: Modi is not corrupt
In May 2012, anti-corruption campaigners Anna Hazare and Arvind Kejriwal visited Gujarat. They came away declaring it the most corrupt state in the country. Why they have not continued to highlight corruption in Gujarat is anyone’s guess.
Several years ago, the Tata Motor Company was allowed to establish a plant to build the “world’s cheapest car” in Gujarat with surprising ease, flouting every rule in the book and even the state’s industrial policy.
http://www.ucanews.com/news/what-if-modi-becomes-indian-premier/70249
In recent years, India has seen a growing phenomenon called 'paid news'. This is where money changes hands in return for sympathetic press coverage.
There have been hundreds of cases involving politicians, celebrities and businessmen paying for favourable reports in the media dressed up as real news.
With the country gearing up for elections soon, the issue has been in sharp focus, but is there any chance of tackling the problem?
http://www.bbc.com/news/business-26689192
http://svaradarajan.com/2014/03/27/the-cult-of-cronyism/
Let me make it clear that there are major problems with the measurement of income inequality in India. Of course, there are data problems in every country. But among all democracies, India is probably the country for which we have met the largest difficulties in getting reliable data. In particular, India's income tax administration has almost given up compiling detailed income tax statistics, although detailed yearly reports called "All-India Income Tax Statistics" are available from 1922 to 2000. This lack of transparency is problematic, because self-reported survey data on consumption and income is not satisfactory for the top part of the distribution, and income tax data is a key additional source of information in every country. The consequence is that we know very little about the actual decomposition of GDP growth by income and social groups in India over the past few decades.
You propose a 'utopian' global wealth tax to redistribute wealth. If it is so impracticable, what's the use of proposing it?
A global wealth tax together with a global government is certainly a utopia. But there is a lot that can be achieved at the national level and through intergovernmental agreements. In particular, countries like US, China or India are sufficiently large to make their tax system more progressive. For instance, the US — about one quarter of world GDP — could transform their property tax into a progressive tax on net wealth. They are sufficiently large to impose credible sanctions on countries and banks (like Swiss banks) that do not transmit the information they need to enforce their tax law.
You criticize economists for their 'childish passion' for mathematics in your book. How should they deal with their subject?
I am trying to put the distributional question and the study of long-run trends back at the heart of economic analysis. In that sense, I am pursuing a tradition which was pioneered by the economists of the 19th century, including David Ricardo and Karl Marx. One key difference is that I have a lot more historical data. With the help of many scholars, we have been able to collect a unique set of data covering three centuries and over 20 countries. This is by far the most extensive database available in regard to the historical evolution of income and wealth. This book proposes an interpretative synthesis based upon this data. I also use simple theoretical models in order to account for the facts.
http://timesofindia.indiatimes.com/home/stoi/deep-focus/Top-1-in-India-owns-8-9-of-national-income-rockstar-economist-Thomas-Piketty-says/articleshow/34949259.cms
After he fled to the authors’ lounge, Mr. Piketty told me that he found the elite of India “hypocritical” for urging their government to address inequality by pouring resources into economic development, like building infrastructure or helping selected industries. This is self-serving, he says, and only increases the gap between the rich and the poor. In his opinion, governments should find the means to invest more in social welfare, like primary education and health care.
Before the world wars, he said, “the French elite used to say the same things that the Indian elite now say, that inequality would be reduced with rising development.” But after the wars, he said, the French began to see that direct investment in welfare was the way forward.
“I hope the Indian elite learn from the stupid mistakes of the other elites,” he said. “Learn from history.”
India is just emerging from what many regard as a catastrophic experiment in a type of socialism, the sort that economists like Amartya Sen, the Nobel laureate, say was not socialism in the first place, because it neglected health care and primary education. What the Indian elite learned from that history was to fear and loathe the idea of the welfare state.
In 1991, India reached the nadir of an economic crisis that forced it, in exchange for a financial rescue from the International Monetary Fund, to begin liberalizing its economy along the free market lines that were championed then by Washington. In the years that followed, the rich and the educated benefited the most, though the poor are better off today than they were before those changes.
Having prospered in recent decades, the Indian elite have faith in this economic model. But there is also a wide acceptance that India’s inadequate investments in education and health are holding the nation back.
“The problems India is trying to solve are problems other countries are trying to solve,” Mr. Piketty had said during his lecture. “India is trying to solve very complicated problems.”
https://www.washingtonpost.com/news/worldviews/wp/2016/07/27/india-sends-elite-commandos-to-guard-billionaires-wife-outrage-ensues/
Imagine, if you will, the kind of outcry that would occur in the United States if the government sent a Secret Service detail to protect Melinda Gates, wife of Bill Gates.
That explains a bit of the furor in India this week after a Hindustan Times report that the Indian government was dispatching a team of elite commandos to protect Nita Ambani, the socialite wife of India’s richest man.
Her husband, Mukesh Ambani, an oil and gas magnate worth $21 billion, has had a government security escort since 2013, when he was the subject of terror threats, and covers the costs himself.
But in a country where there is a shortage of police officers, the news about 10 additional officers for the wife rankled.
“Women raped daily in Delhi. No security for them despite repeated requests. But [prime minister Narendra Modi] providing security to his friends,” Delhi’s chief minister, Arvind Kejriwal, said in a tweet.
The government said that a threat-assessment report by central security agencies deemed Nita Ambani’s protection necessary, according to the Hindustan Times report.
Ambani, 52, is an art collector and serves on the board of directors of her husband's company and chair of its charity wing. The couple live in a famous 27-story home in Mumbai that has a ballroom, a movie theater and six parking levels and has been featured in Vanity Fair.
As pretentious as it gets - 27 floor Mumbai house of Ambani family, 600 servants, $2 billion. pic.twitter.com/XsQUwk3mm6
— Frank Vivier (@dievlamgat) June 17, 2016
The news reignited the debate of “VIP privilege” in India, where in recent years ordinary citizens have begun to chafe against what they see as undue perks given to the rich and famous, who are whisked through airport waiting lines, ride in motorcades that clog traffic and, in the case of politicians, live in luxury, government-assigned bungalows.
The data site IndiaSpend estimated in 2013 that in India, which is short about a half-million police officers, an estimated 47,000 officers are dispatched to protect 14,842 VIPs.
http://www.livemint.com/Money/MML9OZRwaACyEhLzUNImnO/The-richest-1-of-Indians-now-own-584-of-wealth.html
In the last two years, the share of the top 1% has increased at a cracking pace, from 49% in 2014 to 58.4% in 2016.
The richest 1% of Indians now own 58.4% of the country’s wealth, according to the latest data on global wealth from Credit Suisse Group AG, the financial services company based in Zurich. Credit Suisse has published the report every year since 2010.
The share of the top 1% is up from 53% last year. In the last two years, the share of the top 1% has increased at a cracking pace, from 49% in 2014 to 58.4% in 2016
Does that mean the trend of the very rich getting richer is because of the Modi government? Not really—as the chart shows, the share of the top 1% in the country’s total wealth improved from 40.3% in 2010 to 49% in 2014. But the numbers do suggest that the very rich are expanding their share at a faster clip now. The richest 10% of Indians haven’t done too shabbily either, increasing their share of the pie from 68.8% in 2010 to 80.7% by 2016. In sharp contrast, the bottom half of the Indian people own a mere 2.1% of the country’s wealth.
Data from Credit Suisse shows that India’s richest do well for themselves whichever government is in power. In 2000, for instance, the share of the richest 1% was a comparatively low 36.8% of the country’s wealth. In the last 16 years, they have increased their share from a bit more than a third to almost three-fifths of total wealth.
The tale of Gautam Adani’s giant power plant reveals how political will in India bends in favor of the dirty fuel
By Gerry Shih, Niha Masih and Anant Gupta
https://www.washingtonpost.com/world/2022/12/09/india-coal-gautam-adani-godda/
GODDA, India — For years, nothing could stop the massive coal-fired power plant from rising over paddies and palm groves here in eastern India.
Not objections from local farmers, environmental impact review boards, even state officials. Not pledges by India’s leaders to shift toward renewable energy.
Not the fact that the project, ultimately, will benefit few Indians. When the plant comes online, now scheduled for next week, all of the electricity it generates is due to be sold at a premium to neighboring Bangladesh, a heavily indebted country that has excess power capacity and doesn’t need more, documents show.
The project, however, will benefit its builder, Gautam Adani, an Indian billionaire who according to Global Energy Monitor is the largest private developer of coal power plants and coal mines in the world. When his companies’ stock peaked in September, the Bloomberg Billionaires Index ranked Adani as the second-richest person on the planet, behind Elon Musk.
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One of the power projects would be built by Adani, who had provided a corporate jet for Modi to use during his political campaign and accompanied the newly elected prime minister on his first visits to Canada and France. After Modi’s trip to Bangladesh, that country’s power authority contracted with Adani to build a $1.7 billion, 1,600-megawatt coal power plant. It would be situated 60 miles from the border, in a village in Godda district.
At the time, the project was seen as a win-win.
For Modi, it was an opportunity to bolster his “Neighborhood First” foreign policy and promote Indian business. Modi asked Bangladesh’s prime minister, Sheikh Hasina, to “facilitate the entry of Indian companies in the power generation, transmission and distribution sector of Bangladesh,” according to an Indian Foreign Ministry readout of their meeting.
For her part, Hasina envisioned lifting her country into middle-income status by 2020. Electricity demand from Bangladesh’s humming garment factories and booming cities would triple by 2030, the government estimated.
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Facing a looming power glut, Bangladesh in 2021 canceled 10 out of 18 planned coal power projects. Mohammad Hossain, a senior power official, told reporters that there was “concern globally” about coal and that renewables were cheaper.
But Adani’s project will proceed. B.D. Rahmatullah, a former director general of Bangladesh’s power regulator, who also reviewed the Adani contract, said Hasina cannot afford to anger India, even if the deal appears unfavorable.
“She knows what is bad and what is good,” he said. “But she knows, ‘If I satisfy Adani, Modi will be happy.’ Bangladesh now is not even a state of India. It is below that.”
A spokesman for Hasina and senior Bangladeshi energy officials did not respond to a detailed list of questions and repeated requests seeking comment.
Critics say his rise is symbolic of a system where too much power is in the hands of too few
https://www.ft.com/content/474706d6-1243-4f1e-b365-891d4c5d528b
By Stephanie Findlay in New Delhi and Hudson Lockett in Hong Kong NOVEMBER 12 2020
When the Indian government approved the privatisation of six airports in 2018, it relaxed the rules to widen the pool of competition, allowing companies without any experience in the sector to bid. There was one clear winner from the rule change: Gautam Adani, the billionaire industrialist with no history of running airports, scooped up all six.
His clean sweep was met with outrage. The Kerala state finance minister said Mr Adani winning the 50-year lease to operate the Trivandrum International Airport was an “act of brazen cronyism” that showed how the central government favoured politically connected tycoons. India’s aviation minister replied that the open bidding process was carried out in a “transparent manner”.
Overnight Mr Adani became one of the country’s biggest private airport operators. He is also its largest private ports operator and thermal coal power producer. He commands a growing share of India’s power transmission and gas distribution markets, and this year announced that his renewables arm Adani Green Energy would invest $6bn to build solar plants with a capacity of 8GW, one of the largest renewables projects in the world.
Along with Reliance Industries chairman Mukesh Ambani, Mr Adani is today one of the most visible tycoons in the country, whose prominence has accelerated in the years since Narendra Modi was elected prime minister in 2014. Like both Mr Modi and Mr Ambani, Mr Adani comes from the western state of Gujarat, where he was a key supporter of Mr Modi and his ruling Bharatiya Janata party as it rose to dominate national politics.
When Mr Modi took office, he flew from Gujarat to the capital New Delhi in Mr Adani’s private jet — an open display of friendship that symbolised their concurrent rise to power. Since Mr Modi came into office, Mr Adani’s net worth has increased by about 230 per cent to more than $26bn as he won government tenders and built infrastructure projects across the country. “Nation building” is Mr Adani’s motto and he likes to talk about helping India achieve energy security.
But as New Delhi accelerates its privatisation drive to offset the severe economic shock of the coronavirus pandemic, Mr Adani’s mushrooming empire has become a focus of criticism for those who believe that capital is being concentrated in the hands of a few favoured corporate titans at the expense of India’s middle class.
Some argue the concentration of economic power in family-run conglomerates is a way to fast-track India’s economic development, like the chaebol did for postwar South Korea. But critics say the rapid consolidation of state assets is creating monopolies and stifling competition.
“Is India going to move towards the east Asian model or the Russian model? So far the tendency looks towards the latter [more] than the former,” says Rohit Chandra, assistant professor of public policy at the Indian Institute of Technology Delhi. “It’s not clear whether India’s concentration of capital will lead to the long-term benefit of Indian consumers.”
Whether India’s industrialisation leaves it more closely resembling the US at the turn of the 20th century when the likes of oil magnate John D Rockefeller wielded vast influence, or Russia in the 1990s, Mr Adani’s voracious appetite for dealmaking and political instincts have ensured he will play a central role.
“Gautam Adani is very powerful, very politically well connected and very astute at using that power,” says Tim Buckley, an energy analyst based in Australia who tracks India. “He is Modi’s Rockefeller.”
@EdwardGLuce
"...India, which is jailing its opposition leader on a trumped up defamation charge; Netanyahu, who wants to quash Israel's independent courts; & Mexico, where Obrador aims to end free & fair elections. With pals like these, democracy needs no foes." Me.
https://twitter.com/EdwardGLuce/status/1641043796556238848?s=20
https://www.ft.com/content/8e1b7774-da4d-448d-aa3f-94d269e64c35
President Joe Biden’s second summit for democracy, which is taking place this week, is both virtual and surreal. Among the participants are India, which is in the process of jailing opposition leader Rahul Gandhi on a trumped up defamation ruling; Israel, whose leader, Benjamin Netanyahu, wants to shut down judicial independence; and Mexico, whose leader, Andrés Manuel López Obrador, is trying to end free and fair elections. With friends such as these, democracy hardly needs enemies.
Biden’s aims are noble, and it is noteworthy that neither Hungary nor Turkey, regarded in Washington and western Europe as illiberal democracies, was invited. But the president’s means are open to doubt. According to V-Dem, a Swedish research institute, almost three quarters of the world’s population now live in autocracies against less than half a decade ago. That vertiginous shift justifies the term “democratic recession”.
It is difficult to believe a liberal democratic Russia would have invaded Ukraine. It is equally hard to imagine the people of an autocratic Ukraine fighting as fiercely for their freedom as they are doing now. It is thus reasonable for the US to think that spreading democracy is in its national interest. The problem is that America is not very good at it.
Nowhere has the US expended more guns and butter than in the Middle East. The democratic returns have been almost uniformly negative. The Arab world’s only recent convert, Tunisia, was recently lost to a coup d’état. Israel’s democracy, meanwhile, hangs in the balance. That is without mentioning the fact that the Jewish nation state is not exactly democratic with the Arab territories it occupies.
Sarah Margon, whom Biden named to lead his administration’s efforts on democracy and human rights, withdrew her name in January after senators objected to her criticisms of Israel. Having a record of arguing for democracy seems like an odd rap against the person whose job that will be.
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As India’s foreign minister, S Jaishankar, put it last year: “Europe has to grow out of the mindset that Europe’s problems are the world’s problems, but the world’s problems are not Europe’s problems.” What Jaishankar really meant, of course, was the west as a whole. But he was careful to exclude the US, just as Biden is careful not to mention India’s democratic backsliding. Each needs the other to counter China.
Here it gets even muddier. India’s treatment of its Muslim minorities is arguably as bad as China’s policies in Xinjiang. The US State Department has labelled the latter “genocide” — the gravest charge possible. Yet barely a peep is heard from Washington about what is going on in Kashmir.
When the west can be bothered to listen, the global south’s consistent refrain is for more dollars to help their shift to clean energy, better infrastructure and modern healthcare. Which of the two great powers, China or the US, helps the most is likeliest to shape their political future and foreign policy alignment. One of the by-products of Russia’s invasion of Ukraine is that it has brought this pressing question to the fore.
Biden’s White House is trying to come up with a coherent US approach to the global south, but officials admit it is a work in progress. China has pumped more money into the developing world than all the west combined — with both good and bad effects. Whether the Malis, Cambodias and Bolivias of this world become democracies lies in their hands. The best way of nudging them down that path is to lecture less and listen more.
https://hindenburgresearch.com/sebi-chairperson/
As detailed in our original Adani report, documents from the Directorate of Revenue Intelligence (DRI) alleged that Adani “grossly” overvalued the import valuation of key power equipment, using offshore shell entities to siphon and launder money from the Indian public. [1]
A subsequent investigation by non-profit project Adani Watch in December 2023 showed how a web of offshore entities, controlled by Gautam Adani’s brother, Vinod Adani, were recipients of funds from the alleged over-invoicing of power equipment.
In one complex structure, a Vinod Adani controlled company had invested in “Global Dynamic Opportunities Fund” (“GDOF”) in Bermuda, a British overseas territory and tax haven, which then invested in IPE Plus Fund 1, a fund registered in Mauritius, another tax haven.
A separate investigation by the Financial Times showed that the parent fund of GDOF – the Bermuda-based Global Opportunities Fund (“GOF”) – was used by two Adani associates “to amass and trade large positions in shares of the Adani Group”.
These nested funds are managed by Indian Infoline (“IIFL”), now called 360 One per private fund data and IIFL’s marketing material. [1, 2]
IIFL, is a publicly listed wealth management firm in India which has a long history in setting up convoluted fund structures and with previous ties to the Wirecard scandal, Germany’s largest ever fraud case.[2] IIFL Wealth was alleged to have committed fraud in a takeover deal involving Wirecard, using a Mauritius fund structure, per a lawsuit in UK courts.
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What we hadn’t realized: the current SEBI Chairperson and her husband, Dhaval Buch, had hidden stakes in the exact same obscure offshore Bermuda and Mauritius funds, found in the same complex nested structure, used by Vinod Adani.[3]
Madhabi Buch and her husband Dhaval Buch first appear to have opened their account with IPE Plus Fund 1 on June 5th, 2015 in Singapore, per whistleblower documents.
A declaration of funds, signed by a principal at IIFL states that the source of the investment is “salary” and the couple´s net worth is estimated at $10 million.