<<With continuing losses on the market, the cancelation of the share sale
and moves by foreign investors to clarify the extent of their exposure to
Adani <https://www.ft.com/content/2dd6c205-79c4-47be-844c-fb8ba617bec4>, it
seems clear that the controversy is not going away as quickly as some
predicted or hoped.

The Adani controversy is spectacular. But there is a real danger, if we
address it as a question of alleged financial malpractice, that we miss the
real issue...>>
Chartbook #193 Indian nation-building, Modi and the Adani crisis

Adam Tooze
Feb 3



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The upheaval rocking the Adani business empire is one of the dramatic
global developments of the last week.

I was delighted that The Wire
saw fit to pick up and republish Chartbook #190. I’ve long harbored a
secret ambition to join the ranks of the Wire-wallahs. Cam and I also
featured the Adani story on the Pod this week.

How India's Adani Group Lost Billions Overnight

Ones and Tooze


With continuing losses on the market, the cancelation of the share sale and
moves by foreign investors to clarify the extent of their exposure to Adani
it seems clear that the controversy is not going away as quickly as some
predicted or hoped.

The Adani controversy is spectacular. But there is a real danger, if we
address it as a question of alleged financial malpractice, that we miss the
real issue. This is well brought out by the op-ed by Mihir Sharm

… talk of cronyism misses the point. If Adani didn’t exist, the Indian
government would have had to invent him: The development model we have now
chosen requires risk-taking “national champions” such as the Adani Group. …
Much of what Hindenburg put in its report doesn’t count as news for Indian
investors. They have known for years that Adani Enterprises Ltd., the
fulcrum of the Adani empire, is loaded down with debt, and that the
ultimate source of its funding is remarkably opaque. Adani stock is
generally thinly traded; few here will be willing to believe that Adani
companies set out to defraud retail investors, even if both public sector
banks and state-owned insurers have bet heavily on them. No, Indians’ real
fear is something else — that Gautam Adani and his companies simply cannot
do what they say they will. Can they build the roads they have promised,
improve the ports they have been given, maintain the airports they won in a
bid? Until now, nobody else has been able to do so.

You don’t have to agree with Sharma’s critique of “old-fashioned industrial
policy”, to see the force of his point. What is really at stake here is not
the purity of financial markets, but a model of economic development. Who,
if anyone, can get things done?

On the massive reach of the “Two As” (The Adani and Ambani conglomerates)
and their implications for India’s political economy, Arvind Subramian is,
as usual, enlightening). Here a talk with The Wire about India’s growth

For a useful (and rather downbeat) macro-take on the Indian setting of the
Adani crisis, I found this thread very helpful.
[image: Twitter avatar for @Geo_papic]
Marko Papic @Geo_papic
FDI has not contributed to gross capital formation, which speaks to the
same issue.
[image: Image]
2:39 PM ∙ Jan 31, 2023

For deeper historical perspective on India’s growth outlook, you may wish
to pick up Ashoka Mody’s typically fiery interpretation of India’s economic
development since independence, which is being released by Stanford
University Press
this month.

Trigger warning: Mody’s treatment is a no bolds barred attack on “India

Challenging prevailing narratives, Mody contends that successive
post-independence leaders, starting with its first Prime Minister,
Jawaharlal Nehru, failed to confront India's true economic problems,
seeking easy solutions instead. As a popular frustration grew, and
corruption in politics became pervasive, India's economic growth relied
increasingly on unregulated finance and environmentally destructive
construction. The rise of a violent Hindutva has buried all prior norms in
civic life and public accountability.

It is particularly striking for its moral tone.

Mody does not deny the growth, which in recent decades has lifted hundreds
of millions out of absolute poverty. But he also highlights mounting
inequality, which now places India alongside South Africa and Brazil as one
of the most unequal societies on earth;

India’s failure to keep up with its Asian rivals above all in female

And the chronic problems of unemployment and underemployment that result
from failing to find a suitably-sized niche in the global division of

Compiling a list of critical voices like this, you can easily come across
as though you don’t appreciate the dramatic transformation in material
circumstances which India and Indians have achieved since the 1980s. In
fact, a critical perspective on contemporary India and its politics
acquires even more force if you reckon with the reality of spectacular

Take the remarkable digital infrastructure known as the “India Stack”,
starting with the campaign for complete biometric identification set in
train in 2009.

For an uninhibited celebration of digital infrastructure as a mechanism for
incorporating hundreds of millions of people, both into the governmental
machinery of the Indian state and a national market, see Raghavan et al 2019
The graphic below rather nicely illustrates the way in which technology
maps onto a caricatured sociology of 21st-century India. A society split
three ways between (1) fully empowered smart phone users, (2) families in
more traditional clothing accessing services on simpler cell phones and (3)
elderly village dwellers whose access is enabled indirectly by way of
Aadhar-tied merchant pay terminals in every village across India.

For a more critical take, locating the Aadhaar system in the history of the
Indian state, check out this piece by Kavita Dattani
also from 2019. The abstract does a good job of explaining what is at

In many of the ex-colonies of European empires, biometric technology
systems are being built under an ethos of welfare and financial service
delivery. One case in this broader trend of postcolonial governance is
India's Aadhaar and India Stack. This paper uses this case to explore how
the in-sourcing of technology into means of governing, behind a front of
participatory “good governance,” is contributing to the historical
trajectory of citizenship regimes in India. Through claims of reducing
financial “leakages,” Aadhaar, a biometric identification database
consisting of fingerprint, iris scan, and photograph, has become compulsory
for accessing welfare in India. The Indian government makes a case for
Aadhaar using a propaganda discourse of its success, based on weak
evidence. The India Stack, a set of cloud-based application programming
interfaces (APIs) built on top of the Aadhaar database, offers a digital
infrastructure for private companies to verify identities using Aadhaar
data and to offer other “services” including “financial services.” The
ability to access data, paired with a “revolving door” of individuals
between state and corporations, points to an ulterior goal of both Aadhaar
and the India Stack: creating winners in the corporate and financial
technology sectors. The Indian corporate-state run through a
“governtrepreneurism” uses Aadhaar and the India Stack as new digital
technologies of governmentality to transform populations into subjects or

To anyone who has to deal regularly with the antiquated pre-digital
processes of governance in either the United States or many parts of
Europe, the degree of digitization in India often beggars belief.

New Delhi in its role as G20 president
is now putting India’s digital stack in the global spotlight. Delhi is
selling “India Stack Global
as a model for tech and governance solutions worldwide, but particularly
for middle- and low-income countries.

Digitization would be completely unthinkable, if it were not for the
progress that has been made in the electrification of India.

These data are from the India Residential Energy Survey
as analyzed by Shalu Agrawal et al of CEEW.

Of course, India’s per capita power consumption is still very low compared
to China or advanced economies. Nor does connection to the grid mean
24-hour power supply. Especially in the rural North-East, power supply is
intermittent. But, a generation ago, less than half of rural households in
India had any connection to the power network at all. Now almost 97 percent

Historically, India’s energy system has been heavily dependent on coal.
Gautam Adani is a coal baron notorious for his giant Australian development
plans. But since PM Modi has committed India to decarbonization by 2070,
Adani has also become a champion of India’s energy future as a renewable
energy power house with some of the lowest per unit costs of both solar and
wind in the world.

Source: Economist

Both the Ambani and Adani groups have seized on the new agenda, promising
to make India a hydrogen champion and “indigenising the entire supply
chain”. No longer will the value of India’s currency fluctuate with the oil
price even as it did in the last 12 months.

It adds up to an impressive and coherence vision of change. Comprehensive
digitization, fed by an encompassing national grid, powered by national
renewable energy generation - this is nation-building for real. And it
matters all the more in a society in which, as Elizabeth Chatterjee
has shown us, electricity has long been seen as an integral part of the
national welfare state and the project of nation-building.

However ambiguous this progress and however complex are its explanations -
it clearly began decades ago - it has foundational significance for
contemporary India. You cannot understand the genuine mass appeal of Prime
Minister Modi and the BJP unless you recognize the way in which they have
managed to associate themselves with a real and very dramatic
transformation and at the same time to cast their opponents as those who
for so many decades failed to deliver even the most basic services for
India’s population. Following the Gujarat model of privatized
infrastructure model, corporate interests are not shamefaced but front and
center in this vision of nation-building. Nation-building
is the key boast of the Adani group. And it is that model that is at stake
in this crisis.

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