The electoral setback suffered by India’s Prime Minister Narendra Modi on June 4 has led to another, at a cost of billions of dollars. The mixed results of the ruling party, the Indian People’s Party (BJP, for Bharatiya Janata Party), which, with a minority of 240 MPs out of a total of 543, must govern within a coalition, sent Adani conglomerate companies plunging on the stock market. Nearly $45 billion (€41.9 billion) in valuation went up in smoke in a single day.
Gautam Adani, founder of the group of the same name, saw his fortune soar from $70 million to $140 billion over the years due to his close ties with Modi. Adani Group’s heavy reliance on public contracts and concessions, combined with state protection, has raised concerns over potential fraud and accounting manipulation. The recent investigation by the Securities and Exchange Board of India into these allegations underlines the risks associated with crony capitalism in India.
Debt doubled in five years
Despite accusations of fraud and poor quality coal supply, the Adani Group continues to attract partnerships and loans, doubling its debt in the past five years. Modi’s political influence and financial support from investors make it vital for the group to maintain its position and avoid further setbacks. Companies have contributed significantly to the BJP to secure their interests, highlighting the close relationship between politics and business in India.