The upheaval rocking the Adani business empire is one of the dramatic global developments of the last week.
I was delighted that The Wire saw fit to pick up and republish Chartbook #190. I’ve long harbored a secret ambition to join the ranks of the Wire-wallahs. Cam and I also featured the Adani story on the Pod this week.
|How India’s Adani Group Lost Billions OvernightOnes and Tooze32:53|
With continuing losses on the market, the cancelation of the share sale and moves by foreign investors to clarify the extent of their exposure to Adani, it seems clear that the controversy is not going away as quickly as some predicted or hoped.
The Adani controversy is spectacular. But there is a real danger, if we address it as a question of alleged financial malpractice, that we miss the real issue. This is well brought out by the op-ed by Mihir Sharma:
… talk of cronyism misses the point. If Adani didn’t exist, the Indian government would have had to invent him: The development model we have now chosen requires risk-taking “national champions” such as the Adani Group. … Much of what Hindenburg put in its report doesn’t count as news for Indian investors. They have known for years that Adani Enterprises Ltd., the fulcrum of the Adani empire, is loaded down with debt, and that the ultimate source of its funding is remarkably opaque. Adani stock is generally thinly traded; few here will be willing to believe that Adani companies set out to defraud retail investors, even if both public sector banks and state-owned insurers have bet heavily on them. No, Indians’ real fear is something else — that Gautam Adani and his companies simply cannot do what they say they will. Can they build the roads they have promised, improve the ports they have been given, maintain the airports they won in a bid? Until now, nobody else has been able to do so.
You don’t have to agree with Sharma’s critique of “old-fashioned industrial policy”, to see the force of his point. What is really at stake here is not the purity of financial markets, but a model of economic development. Who, if anyone, can get things done?
On the massive reach of the “Two As” (The Adani and Ambani conglomerates) and their implications for India’s political economy, Arvind Subramian is, as usual, enlightening). Here a talk with The Wire about India’s growth prospects.
For a useful (and rather downbeat) macro-take on the Indian setting of the Adani crisis, I found this thread very helpful…
Read more: https://adamtooze.substack.com/p/chartbook-193-indian-nation-building
Mihir Sharma: What Really Worries Indians About Adani’s Empire
Their main question isn’t where his money comes from. It’s whether he can accomplish what he says he can