Lhe electoral disappointment of Indian Prime Minister, Narendra Modi, on June 4, led to another, which amounts to billions of dollars. The mixed score of the ruling party, the Indian People’s Party (BJP, for Bharatiya Janata Party), which, with a minority of 240 deputies out of a total of 543, must govern within a coalition, caused the stock market to plunge the companies of the Adani conglomerate. Nearly $45 billion (41.9 billion euros) of valuation went up in smoke in a single day.
Gautam Adani, founder of the group of the same name, is known for his proximity to the nationalist and autocratic power of Mr. Modi, originally, like him, from Gujarat, in the west of the country. His group, present in infrastructure, energy, defense, aerospace and even the mining sector, depends largely on public markets or concessions. When Mr. Modi became chief minister of the state of Gujarat in 2001, Mr. Adani’s fortune was estimated at $70 million. It jumped to $7 billion when Mr. Modi became prime minister in 2014. Since then, the businessman has risen to the ranks of Asia’s richest people, with a fortune estimated at $140 billion. .
Its stock market collapse underlines the vulnerability of Indian capitalism, known as “connivance”. When a company depends on the favors of a leader, the slightest electoral setback causes it to collapse like a house of cards. State protection also offers a certain impunity, which increases the risks – and suspicions – of fraud. The Indian Financial Markets Authority is investigating possible manipulation and accounting fraud which made it possible to artificially inflate the valuation of the Adani group, as pointed out the American hedge fund Hindenburg Research, in a report published in 2023.
Debt doubled in five years
Daily life Financial Times revealed, in an investigation published in May, that the Indian group had defrauded a public electricity company in southern India by supplying it with coal of poorer quality than that which it had sold to it. A fraud which would have earned him several hundred million dollars. Accusations all rejected by Adani. Despite these weaknesses, the group remains popular. The oil company TotalEnergies has established several partnerships with it and, above all, the banks have lent it colossal sums, doubling its debt over the last five years.
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