The 'crony capitalist': Understanding Adani — an Indian perspective

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'Gautam Adani is a crony capitalist. Adani’s phenomenal and rapid rise has solely been due to his proximity with the political powers in India.' (Image via @Hajindersingh2)

Freelance Indian journalist Gaurav Tyagi charts the rise of Adani, its finances, its links to corruption and its proposed coal mines in Australia. 

The rise of Adani

Adani Group, led by Gautam Adani, has risen phenomenally during the last decade. It is one of the biggest leveraged business house in India. It is very easy for corporate tycoons with proximity to political powers in India to borrow money from state controlled banks. As a result, Adani borrows a lot of capital from India’s state-owned banks.

Government banks in India have a huge problem with bad loans, wherein businessmen borrow huge capital from them but don’t pay it back, resulting in bank’s writing off these sums as non performing assets or bad loans. 

Adani is the head of a conglomerate, which is India’s biggest port operator, largest private producer of electricity. The group also has substantial interests in coal mining, civil construction, logistics, international trade, education, real estate, edible oils and food storage.

Contrary to media reports about his humble origins, Gautam Adani comes from a business background. He is a school drop-out who moved to Mumbai at the age of 16, where he dabbled in the diamond trade before coming back to run a small plastic factory owned by his brother.

Later, in 1988, he set up his own business, Adani Enterprises, for import and export of commodities. This move set up his business pattern; earn money in one business, then take heavy loans against its income and expand into another venture.

According to Forbes magazine, the 55-year-old Ahmedabad-based businessman had a net worth of US$8 billion (AUD$10 billion) as at 30 August 2017.

Adani’s close links with the Indian Prime Minister

Both hailing from the Indian province of Gujarat, Gautam Adani is one of Indian Prime Minister Narendra Modi’s closest associates. 

During the campaigning for Indian parliamentary elections in 2014, Modi used Adani’s private aircrafts to fly around Indian for his electoral campaign. During that time, Modi made corruption by the incumbent government a big point in his election speeches.

Menace of corruption in India

Foreign direct investment (FDI) data reveals that during the period between April 2000 to March 2011, 41.8% came to India from Mauritius. But this country, with a small economy, cannot possibly constitute the topmost source nation for FDI funds in India.

Investments in India are routed through Mauritius for tax-avoidance as well as for hiding the identities of the real investors through a process known as "round tripping".

Even the Indian Government is unaware, whether the source of this money is from criminal proceeds or just tax avoidance.

Bribes are offered at every level in India, from the ministers holding key portfolios to the peons standing at the door of government offices. The whole administrative set-up benefits from this system, therefore one hardly ever witnesses any whistleblowers to this widely prevalent corruption in the Indian establishment.

Modi, on assuming the office of Indian Prime Minister on 28 May 2014, set up a special investigation team (SIT) to investigate corruption cases.

Adani's Misdeeds

The biggest case involving black money (unexplained/untaxed funds) before the establishment of the SIT was that of the Adani Group.

Adani group allegedly took out over Rs (Indian rupees) 5,000 crores (1 crore = 10,000,000, therefore about AUD$1 billion) to tax havens through inflated bills for the import of power equipment from South Korea and China.

As per a senior official of SIT, if the Adani case reaches its logical conclusion the business group will be required to pay a fine of approximately Rs15,000 crores (AUD$3 billion)

He further says it’s a "watertight" case. The trail of documents shows how the Adani group diverted Rs 5,468 crores (AUD$1.1 billion) to Mauritius via Dubai after Modi became Indian Prime-Minister.

"Bribes are offered at every level in India, from the ministers holding key portfolios to the peons standing at the door of government offices."

The officer heading the Ahmedabad branch was raided by Government agencies. He was accused of possessing disproportionate assets. Nothing, however, was proved against him, despite months of investigation.

The two other senior-most officers, who were looking after this case against Adani were forced out of the agency.

The service tenure of the man holding the Enforcement Directorate (ED) when the case was opened also ended abruptly. The Ahmedabad ED investigators were hot on the trail of Adani at that time.

Adani’s foray into Australia

In 2014, Australia approved a $15.5 billion coal project of Adani. This Carmichael undertaking in Queensland would include one of the world’s biggest coal mines and a new railway line.

Adani plans to dig up and transport about 60 million tones of coal a year for export to India from this mine.

Critics have raised objections over local water use and the adverse impact on the Great Barrier Reef from this proposal.

No future for coal

There is load of pressure on fossil fuels presently. Their future seems quite short. Investors and financiers are pulling out of this segment.

There is an unprecedented support for renewable energy, which costs less than fossil fuels. Among fossil fuels, coal is likely be the first to go.

Indian energy minister stated that solar energy costs less than the energy produced by using coal. Other green energy sources like wave and tidal are also coming up.

The Norwegian Sovereign Fund, the worlds largest, has come up with a list of 52 fossil fuel companies in which it won’t be investing any more. Reliance and Tata Power of India are two such companies.

Bill & Melinda Gates Foundation has pulled out its entire investment of $187 million from oil company BP and $824 million from ExxonMobil.

"Australians should ... say a firm no to Gautam Adani’s coal project in their country."

The Royal Bank of Scotland has reduced its exposure to fossil fuel companies from GBP£4.7 billion (AUD$7.7 billion) to GBP£2.1 billion (AUD$3.4 billion).

In the United States, 200 ageing and polluting coal plants were shut down between 2010 and mid-2015.

In Germany, a strong civil disobedience campaign called Ende Gelände (here and no further) wants to close eight lignite fired plants to reduce carbon dioxide emissions by 12 million tonnes a year.


Gautam Adani is a crony capitalist. Adani’s phenomenal and rapid rise has solely been due to his proximity with the political powers in India.

Modi, the Indian Prime Minister, ensures that wrongdoings and malpractices of Adani business house go unpunished in India.

In return, Adani finances Modi’s political party, the BJP, through large scale cash donations, in which the majority goes unreported.

Modi is acting like a marketing director of Adani on his foreign trips and trying his best to get lucrative deals for Adani group globally.

Australia is a far more mature society than India.

Solar power plus other sustainable ways of producing electricity, like making electricity from garbage, is already being done in European countries, such as Sweden, Czech Republic, Denmark, Norway and Finland, should be pursued in Australia.

Australians should, therefore, say a firm no to Gautam Adani’s coal project in their country. If Australian politicians do not listen, then the Australian media and citizens need to rise up on serious issue.

Neither Australia nor the world needs more polluting coal plants, when environment friendly, cost effective alternatives are available in abundance.

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The 'crony capitalist': Understanding Adani — an Indian perspective

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