regular-article-logo Saturday, 23 September 2023

Whispers galore

The impact of the Adani crisis on the ground

Swapan Dasgupta Published 16.02.23, 04:10 AM
Since the Adani Group is perceived to enjoy a cosy relationship with Prime Minister Narendra Modi, the report, it was believed, was an attempt to strike at Modi by hitting Adani.

Since the Adani Group is perceived to enjoy a cosy relationship with Prime Minister Narendra Modi, the report, it was believed, was an attempt to strike at Modi by hitting Adani.

Among the redeeming features of political activism in India is the opportunity to experience different parts of this very diverse country at very close quarters. At one level, it is all about different sights and sounds, not to mention cuisine. This incredible tourist experience will, of course, endure. Less enduring is likely to be the varied experiences of people, as they respond to different political situations — and not merely in election season. The popular mood, as every student of democracy is aware, is never static. It even has the potential of swinging from one extreme to another. About 15 years ago, when the agitation against the Tata Motors factory in West Bengal’s Singur was at its peak, it was hard to come away from the battlefield with a benign image of the business house that is otherwise held in such high esteem both in India and globally. Today, however, a trip to this part of Hooghly district will see residents lamenting their own miscalculation and the missed opportunity of securing an automobile hub. The ability to read the popular mood and respond appropriately is the foremost challenge of electoral politics.

Last week, as part of a programme to sensitise political workers on the implications of the Union budget, I travelled to the small temple town of Nabadwip in Nadia district of West Bengal. It was, for me, a very educative experience. It was apparent that many middle-class taxpayers often view the government’s larger development strategy, particularly its ambitious modernisation programme, through the prism of personal taxation. This year, for example, there is a large measure of anxiety over the implications of the shift to a new tax code that does away with exemptions. “Is the government wary of insurance schemes?” asked one gentleman. “What will happen to the lakhs of insurance agents all over the country?” asked another. The questions were indicative of the fact that every big dream for the country must be sold through the individual pocket.


However, the big question was reserved till the very end. One articulate gentleman wanted me to speak on the din over the shares of companies controlled by the industrialist, Gautam Adani. He explained why this issue was important. At least two of the major political parties in West Bengal had gone around gleefully whispering in people’s ears that the crash in the Adani shares would lead to a paralysis in the ports and airports since these were controlled by the Adanis. It was also being made out that people’s life insurance policies were at risk since the big insurance companies had invested very heavily in Adani shares. The questioner sought answers to these concerns since it seemed that a big chunk of the bazaar gossip was finding resonance with the public.

What does this isolated incident in a small town in West Bengal tell us about the way in which political and other information is disseminated?

To begin with, it is important to consider the widespread impression of the nature of the Adani crisis. Certainly, many were of the view that a mysterious report emanating from America had triggered a bout of something called ‘short selling’ — the phenomenon is still rather hazy and relatively less known in India, except perhaps among stock market buffs. The Hindenburg report, in turn, was either seen as a legitimate exposé of the underlying weaknesses of the Adani Group, especially its over-leveraged debt. Alternatively, it was perceived as a motivated report aimed at creating turmoil in the Indian markets and, in effect, destabilising the government. Since the Adani Group is perceived to enjoy a cosy relationship with Prime Minister Narendra Modi, the report, it was believed, was an attempt to strike at Modi by hitting Adani. Some have even seen the Hindenburg report and the banned BBC documentary as two coordinate attempts from overseas to undermine the prime minister.

What complicates the different theories of what motivated the Hindenburg report is the associated perception that what has been revealed is a monumental scam. This belief isn’t based on anything but only the hazy notion that at the end of the day, capitalism is an exercise in deceit and short-changing people. Those responsible for spreading alarm across the length and breadth of India have put it across that the Adani crisis is evidence that, despite its claims, the government of Modi, too, is mired in corruption. By persisting with the notion of corruption and ‘scam’, the detractors of the regime have sought to tarnish the image of a man who is seen to be single-handedly holding up the Bharatiya Janata Party.

It has been more than three decades since India junked its socialist pretensions, embraced the market economy, and created more and more space for the private sector and even for foreign capital. However, this progressive shift away from the heavy hand of State control and State supervision was not necessarily accompanied by a change in mindset. In a very large section of the middle classes — arguably one of the greatest beneficiaries of a deregulated economy — there remains a nagging faith in both the public sector and State control. This is particularly evident in the debates on disinvestment and privatisation in Parliament. It is quite plain that the attachment to the imagined comforts of over-regulation and the public sector enjoys support from both ends of the political and ideological spectrum. The disinvestment of Air India was not popular among members of Parliament and the sale of LIC shares was seen as an outrage. In view of these entrenched beliefs and prejudices, especially among the older section of the population, believing the worst about the Adani share meltdown is only to be expected.

The government appears to have calculated that getting into a verbal duel with the Opposition and attempting to explain the present turbulence will only aggravate matters. The belief is that it is best to leave matters entirely to the regulatory bodies such as the Reserve Bank of India and the Securities and Exchange Board of India to take whatever corrective action is needed. This is also based on the assumption that the dust will soon settle on the markets and the short memory of the momentarily aggrieved will do the rest. Modi, meanwhile, should maintain total detachment from the vicissitudes of a corporate group.

Follow us on: