India these days is spoken of in terms of billions. The population is now around 1 billion-plus something and it is anticipated that at any moment a newborn Indian baby’s squeal to the world would announce that India has overtaken China as the most populous nation on planet Earth. India’s economic growth rate is spoken in terms of billions of dollars (US) and even the disbursement of loans to less fortunate countries like ours is in terms of billions of dollars.
Indian businessmen in recent years have been bursting out to the front ranks. In the Billionaire Race, in January this year, an Indian businessman Gautam Adani was ranked the world’s third richest man — some said he was the richest. While Adani was basking in his glory and Indians with Indophiles in his reflected glory, a wicked stroke struck his dollar-lit luminescent empire plunging it into an invisible black hole. Some economists doubt whether the Adani Empire is still functional but Adani and his companies say they are alive and kicking and will continue with all the major projects they have undertaken.
What caused the blackout of the Adani Indian Empire was that Hindenburg Research, an American company investigating global business empires, alleged that financial institutions of companies based in Mauritius linked to the Adani family were manipulating the group’s stock price. Immediately investors took fright and $100 billion in market value evaporated says The Economist magazine in its editorial (Feb 11-17, 2023). Tens of billions have been wiped off the tycoon’s personal wealth, and the company was racing to show it can meet its debt payments, The Economist says.
This columnist’s interest in this event is not the business practices of the Adani Group or the allegations made by Hindenburg Research but the fact that the Adani Group is intimately involved in the phase of development of Indian capitalism that is now evolving and its impact on less powerful countries in the region.
Readers will recall the furore that resulted in August last year when the Gotabaya Rajapaksa government approved two wind power energy projects to the Gautam Adani conglomerate — a 286MW project in Mannar and a 234MW project in Pooneryn. This approval was resisted by some trade unions of the Ceylon Electricity Board and social activists claimed that the approval bypassed tender procedures and was clandestinely signed between the Gotabaya Rajapaksa government and the Adani conglomerate.
The climax of the issue came when CEB Chairman M.M.C. Ferdinando was questioned by Parliament’s Committee on Public Enterprises (COPE) on the award of the project to the Adani Group. He said President Rajapaksa had told him that the Indian Prime Minister Narendra Modi had pressured him to hand over the project to the Adani Group. Both President Rajapaksa and Prime Minister Mahinda Rajapaksa denied the Indian Prime Minister had done so and consequently Ferdinando resigned from the chairmanship of the CEB.
Before these events, there was speculation that a Chinese company was to be awarded these two wind power projects and this had caused much concern to India whose border was not many kilometers away from the locations of these projects.
Gautam Adani and Narendra Modi had been close associates when Modi was the Chief Minister of Gujarat from 2001 to 2014. When Modi became Prime Minister for the first time, he flew from Gujarat to New Delhi in Adani’s plane. Between then and the release of the Hindenburg report, Adani’s personal fortune mushroomed from around US$ 7 billion to US$ 120 billion, The Economist notes.
Adani’s business empire runs some of India’s biggest ports, stores a third of its grain, operates a fifth of its power transmission lines, and makes a fifth of its cement. It was among India’s top ten biggest non-financial firms, by assets and had been projected to grow rapidly, The Economist says.
Foreign Direct Investments (FDIs) are longed for, wooed by developing countries for rapid economic development and welcomed by even big powers. Thus, a cash-strapped country like Sri Lanka would be expected to look at investment from a group like Adani as manna from heaven, some would say. However, vulnerable countries should look at FDIs with intense scrutiny particularly because such investments may be wrapped up in garbs of political, national and strategic interests of investors.
Modi is now on the trail to become India’s prime minister for the third time. He has also visions of making India a world power. The mantle of being the prime minister of the biggest democracy in the world does not deter him from violating basic democratic norms such as his move to remove the provision of a special status given to the state of Jammu and Kashmir in the Constitution with his preponderant parliamentary majority and split it up into two states–Ladakh and Jammu and Kashmir. It is now ruled from the center deploying tens of thousands of armed personnel.
India had not shown much interest in the development of economies of its neighbouring countries, certainly not of Lanka, although interference in political affairs has been quite regular. But India came to the rescue of Lanka at the time of the economic meltdown and signed agreements with Sri Lanka for loans amounting to around 4 billion dollars which had enabled Lanka temporarily tide over the dire crisis. The Indian government continues to pledge its support to Sri Lanka along with the United States, Japan and some Western states which would enable the IMF to release the 2.9 billion dollars requested by Lanka to face the crisis.
This good neighbourly act has to be appreciated by Sri Lankans but the general public is yet unaware of the details of the agreements signed with India. For example, the media have not carried reports on the progress of the two power generation projects which the Adani Group was entrusted with. Is Lanka’s national grid being fed with new power generated by the projects? If not why and when will that happen?
What’s the agreement on the Oil Tank Farm in Trincomalee and the Trincomalee Harbour, if any? Will they be presented to parliament for approval? Or is it the Executive Privilege of the president? What will be the total accumulated debt to India since Indian assistance came in after the meltdown?
It is not done to ‘Look a gift horse in the mouth’ but in today’s international finance, there is nothing called a free cup of tea.
Meanwhile, The Hindu newspaper carried a report (reproduced in the Lankan media) of ‘Indian Business Leaders in Colombo’ saying that ‘despite the meltdown and the consequent political turmoil’ it is still a good time to invest in the cash-strapped economy.
Business expertise is not called for to assert that the best time for a deal is — such as in boxing — when the opponent, is lying on the canvass and is willing to be pulled back onto his feet and raises his hands.
Some Indian businesses in Lanka have certainly helped local industries such as those that came in in the late sixties and continued thereafter and even the more recent ones not linked to political interests but what of those like the Adani Group who are unabashedly committed to helping the implementation of political visions of the ruling party that envisage Sri Lanka as a component to India’s geopolitical strategies?
Trade unions are vehemently opposed to the sale of state-owned properties which they call ‘national treasures’ — even colossal loss-making institutions such as the national airline. While no interest has been evinced in such loss-making projects, it appears that some of the vital national interests may be up for sale such as the Ceylon Electricity Board which owns the national grid, and even the Mahaveli Diversion Scheme’s hydropower generating projects which also irrigate vast acres of rice producing fields. The sale of these projects will be tantamount to the sale of Sri Lanka itself.
FDI has been welcomed by some small nations — but with huge revenue-earning potential — such as the UAE that can use such investments to make them global economic powers. Sri Lanka has no such proclaimed ambitions and shouldn’t it limit itself to sustainable development which all political parties have accepted as their goal?