India’s Power

THERE IS NOTHING like a good, old-fashioned, verbal spat in Parliament to reassure people that democracy is alive and kicking in the country. Both Houses of Parliament witnessed this explosion of democracy on the motion of thanks to the president of India for her address at the beginning of the session.
According to convention, the discussion on the president’s address is never confined to the speech the head of state delivered in the Central Hall of Parliament. It is a licence to all parties and MPs to raise issues of their choice. The presumption is that issues of national concern and pressing state issues will find a parliamentary expression. MPs often find that there are precious few occasions they can make direct political interventions covering a multitude of subjects. A motion of confidence or no-confidence happens to be one, but these happen sparingly. The debate on the president’s address is the one occasion that explicitly political speeches, covering a range of themes, can be delivered without the presiding officer telling the member to stick to the subject.

This year, the entire opposition closed ranks and chose to use the president’s address to mount a no-holds-barred attack on the alleged proximity between Prime Minister Narendra Modi and the head of the Adani Group of companies. It is not that there has been any evidence of a scam or that public-sector banks have added to their non-performing assets, courtesy the Adanis. As of now, there is no evidence of any violation of Indian law. What happened is that an American stock market player’s report that unabashedly seeks to depress the Adani stocks and bonds was widely circulated. The market reacted in a knee-jerk fashion because there was already a suspicion that the debt position of the Adani Group was unduly excessive. The shares crashed and its effects were naturally felt by individual investors and mutual funds.

The crisis of market valuation confronting a business group should, ideally, not be the business of the government. It is, of course, the business of public-sector and quasi-public-sector companies that may have invested in Adani shares. It would also be the business of bodies such as the National Highways Authority of India and the Airports Authority of India that may have awarded an ongoing big project to an Adani company.

Finally, and in one sense, the turbulence in the markets over Adani company shares would be of concern to various Indian missions overseas. The Adanis have invested heavily overseas. The group has a significant presence in Australia where it secured a huge coal mining contract after a stupendous battle with environmentalists and others that didn’t want a new player in the commodities business. The Adanis have also won the contract to run and develop the beautiful Port of Haifa in Israel. The group beat off stiff competition from more established players to establish a big presence in Israel.

In theory, there is no organic link between the Adani Group’s overseas businesses and the Indian state. However, its role in Australia and Israel would indicate that its reputation is closely tied to the credentials of the entire Indian state. Just as the workings of the Tata Group in the UK—where its investments range from steel and automobiles to hotels—rub off on the larger reputation of India, the overall reputation of the Adanis is often wrapped up in the Indian flag. If it does well, the flag flutters proudly, and its wrongdoings often rub off on the country. This may be irrational but it is real. In any case, the overall status of India as a non-threatening but rising global player has helped the Adanis, just as it has helped the Tatas and the Ambanis.

The nuanced relationship of today’s Indian corporates with politicians and political parties is still at a primitive stage. Ideally, a good business house shouldn’t be too concerned about which party is at the helm, as long as the corporate itself maintains a professional distance. Unfortunately, this is often violated by one side or the other. This happens in states. West Bengal is a textbook example where the business environment is far from perfect. Also, the political credentials of governments, both in Delhi and in state capitals, depend on how many jobs the private sector can create. As chief minister of Gujarat, Modi had a natural interest in ensuring that this Gujarati group grew. Conversely, Mamata Banerjee is still tarred by the stigma of having chased Tata Motors out of the state.

The problem with the likes of Rahul Gandhi is that they view businesses as something distant, an invaluable milch cow that must, however, remain outside the premises.

Adani GroupHindenburgIndian ParliamentIndia’s PowerNarendra ModiRahul GandhiTatas