Hasina Seeks Modi's Help to Survive Bangladesh's Economic Crisis

[Riaz Haq]

Shaikh Hasina, the Prime Minister of Bangladesh, recently visited New Delhi to seek political and economic assistance from the Indian Prime Minister Narendra Modi. This summit was preceded by Bangladesh Foreign Minister Abdul Momen's trip to India where he said,  "I've requested Modi government to do whatever is necessary to sustain Sheikh Hasina's government".  Upon her return from India, Sheikh Hasina told the news media in Dhaka, "They (India) have shown much sincerity and I have not returned empty handed". It has long been an open secret that Indian intelligence agency RAW helped install Shaikh Hasina as Prime Minister of Bangladesh, and her Awami League party relies on New Delhi's support to stay in power. Bangladesh Foreign Minister Abdul Momen has described India-Bangladesh as one between husband and wife. In an interview with Indian newspaper 'Ajkal,' he said, "Relation between the both countries is very cordial. It's much like the relationship between husband and wife. Though some differences often arise, these are resolved quickly."  Both Bangladeshi and Indian officials have reportedly said that Sheikh Hasina "has built a house of cards". 

Bangladesh PM Shaikh Hasina (L) with Indian PM Narendra Modi

 British Indian analyst Dr. Avinash Paliwal explains Shaikh Hasina's current dilemma as follows: "Politically reliant on New Delhi, she (Hasina) is finding it increasingly difficult to manage the ramifications of India's turn towards Hindu nationalism that misuses migration from Bangladesh and the Rohingya crisis for domestic electoral gain". Justice Surendra Kumar Sinha, Bangladesh's former Chief Justice,  has said India is backing Sheikh Hasina's autocratic government for its own interest. Here's how prominent Indian journalist SNM Abdi explains Indian intelligence agency RAW's influence in Bangladesh: "India wields more influence in Bangladesh than the Security Council’s five permanent members put together. The Research and Analysis Wing (RAW) is the most dreaded outfit in the neighboring country surpassing even the brutally unforgiving RAB (Rapid Action Battalion). Hasina lives in mortal fear of RAW. She knows that she will be toppled if she displeases India. So she has adopted the policy of pleasing India to retain power at any cost".

Bangladesh has received wide acclaim for its remarkable economic success under the authoritarian leadership of Shaikh Hasina over the last decade. She has jailed many of her political opponents and hanged others. She has tamed the country's judiciary and gagged Bangladeshi mainstream media. What has helped her retain power is the fact she has New Delhi's support and she has succeeded in delivering rapid economic growth that has helped improve the lives of ordinary Bangladeshis. However,  a combination of current global inflation and the resulting economic crisis is threatening to unravel this formula.  

Bangladesh's currency has lost 11% of its value against the US dollar in just one week, import bill has soared by nearly 44%, forex reserves of $37 billion are falling and the revenue from ready made garments export and remittances is not keeping pace with the fast rising imports. Bangladesh is now seeking a $4.5 billion loan to cope with the situation. In addition, India has agreed to trade with Bangladesh in local currencies to reduce pressure on forex reserves. 

Bangladesh is not the only economy in trouble. The European Union, United Kingdom, Japan, Sri Lanka and Pakistan are also experiencing severe economic pain. India's forex reserves are falling and its current account deficit is rising as foreign investors pull out. High energy prices and the strong US dollar are hurting most of the world economies. Food and energy prices have shot up due to the Russia-Ukraine war. The US currency driven by aggressive US Federal Reserve policy of rate hikes has reached new highs. A stronger dollar for the US means cheaper imports, a tailwind for efforts to contain inflation, and record relative purchasing power for Americans. But the rest of the world is straining under the dollar’s rise, according to the Wall Street Journal. 

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[Riaz Haq]

Bangladesh needs to rely less on EU, US markets


By Mostafiz Uddin

https://www.thedailystar.net/opinion/rmg-notes/news/bangladesh-need...

At present, around 60 percent of Bangladesh's garment exports go to the EU. Twenty percent go to the US. The rest are exported globally. These figures have changed slightly in recent years, with the EU gaining a larger share (up from around 52 percent over the past decade) at the expense of the US, where exports have fallen in terms of market share.

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In the US and Europe, a recession is coming. As an apparel maker, I can already feel the early signs of a storm heading our way. Orders have been decreasing for many of us in the industry since this summer, after picking up dramatically at the back end of last year.

The issues around a recession are well-documented. High and rising inflation in the US and much of Europe; soaring energy prices that are placing businesses and households under huge financial strain; fallout from the pandemic, which means many governments have huge debts and are unable to do much more to bail out economies – all of these are factors. Most seasoned economic observers believe that 2023 will be tough.

[Riaz Haq]

Bangladesh could be a test case for end of dollar dominance
By Abhishek G Bhaya

https://news.cgtn.com/news/2022-09-20/Bangladesh-could-be-a-test-ca...

Bangladesh is moving to trade in local currencies with two of its largest trading partners – China and India – in a decision that could well prove to be a test case for the end of the U.S. dollar's dominance in global trade.

Last week, Bangladesh allowed its banks to maintain accounts in Chinese yuan for overseas transactions to reduce dependency on the U.S. dollar as the South Asian country grapples to contain its dwindling foreign reserves.

And according to media reports on Monday, India's top lender, State Bank of India, has asked exporters to trade with Bangladesh in rupee and taka warning against settling deals in the U.S. dollar to avoid exposure to Dhaka's falling reserves.

The developments come amid calls from the Shanghai Cooperation Organization (SCO) – which has both China and India as its members – for increasing the use of national currencies for trade among the member countries at its leadership summit in the Uzbek city of Samarkand last week. Bangladesh is not yet an SCO member but has applied for observer status in the Eurasian organization.

The South Asian country's $416-billion economy is facing severe stress due to rapidly increasing food and energy prices with the prolonged Russia-Ukraine conflict further widening its current account deficit. Bangladesh is facing a shortage of foreign currency due to higher import bills and a steep fall in the Bangladeshi taka's value against the U.S. dollar in recent months.

The country's foreign exchange reserves fell from $48 billion last year to $37 billion as of last Friday, which is sufficient for import cover for only five months, according to data from Bangladesh's central bank.

No wonder, Bangladesh wants to lower trade dependency on the U.S. dollar and it does not see a problem in dealing in local currencies, as the country's Commerce Minister Tipu Munshi asserted last week. Responding to a query at an event in Dhaka, Munshi said that Bangladesh's finance ministry is studying the issue and working on ways to implement local currency trade with its key trading partners.

Last week, the Bangladesh central bank allowed local banks to carry out overseas transactions in Chinese yuan. It is important to note that China-Bangladesh bilateral currency cooperation dates back to 2018 when Dhaka had authorized dealers to maintain a foreign currency clearing account with the central bank in the Chinese yuan.

The Bangladesh Bank's latest decision followed demands from major business chambers such as the Metropolitan Chamber of Commerce and Industries (MCCI) of introducing a second currency besides the U.S. dollar for international trading amid the surging taka-dollar exchange rate.

The MCCI proposed the Chinese yuan as Beijing happens to be Dhaka's largest trade partner and also the largest source of imports. The fact that China already has a Cross-Border Inter-Bank Payments System (CIPS) with the Chinese yuan as the trading currency was also a factor in Bangladesh's decision.

If Bangladesh creates a mechanism for bilateral trade in local currency with India – its second largest trade partner – as well, as recent reports indicate, it will go a long way in reducing the country's dependence on the U.S. dollar for international trade.

[Riaz Haq]

Central banks around the world moved Thursday to combat the effects of a soaring #dollar and rising #inflation, joining the #US Federal Reserve in risking a recession to rein in climbing prices. #currency #economy #UK #England #Norway #SouthAfrica #Japan https://www.wsj.com/articles/bank-of-england-raises-rates-for-seven...
In a flurry of central-bank meetings from Norway to South Africa, many raised rates by larger-than-expected margins in a day that analysts at ING billed as “Super Thursday.”

The Bank of England raised its key interest rate for the seventh consecutive time on Thursday. Before the news came out, the British pound briefly touched its lowest point in 37 years against the dollar before recovering some of its losses to reach $1.13.

Even some countries that didn’t move rates—the Bank of Japan left its policy rate at its previous low level—took other action to ease the growing inflation pressure.

Japan said Thursday it intervened in currency markets to sell dollars and buy yen, the first such intervention in 24 years, to slow the recent fall in the Japanese currency. The yen fell to 145.87 to the dollar, its weakest level since 1998, before the intervention. It then surged to hit 141 yen, though still far off the 115 yen mark at which the dollar was trading earlier this year.

Finance Minister Shunichi Suzuki of Japan later said the government would act again if needed, without indicating the size of the intervention. “Although foreign-exchange rates in principle should be determined in the market, we cannot stand by idly when speculative and excessive moves repeatedly occur,” he said.

The central-bank meetings, mostly pre-scheduled, came after the Fed announced its 0.75-point increase the day before and capped a bustling week of global monetary-policy tightening. Many central-bank officials struggling with a crisis of public confidence after initially arguing that inflationary rises would be temporary, are now racing to raise interest rates to catch up with soaring prices, but not so fast that they trigger unnecessary economic pain.

Switzerland’s central bank joined the stampede toward higher rates by announcing an interest-rate increase that will put its benchmark lending rate above 0% for the first time since 2014, bringing an end to Europe’s last remaining experiment in setting negative interest rates. Sweden’s Riksbank lifted rates by 1 percentage point earlier this week, its largest increase in almost three decades.

[Riaz Haq]

#Bangladesh PM denounces 'tragedy' of rich nations on #climate."The rich countries, the developed countries, this is their responsibility. They should come forward. But we are not getting that much response from them. That is the tragedy" #Floods #Pakistan https://www.channelnewsasia.com/asia/bangladesh-pm-climate-change-r...

NEW YORK: A country of fertile, densely populated deltas, low-lying Bangladesh is among the most vulnerable nations in the world to climate change.

But the urgency of the situation is not being matched by actions of countries responsible for emissions, Prime Minister Sheikh Hasina said.

"They don't act. They can talk but they don't act," she told AFP on a visit to New York for the United Nations General Assembly.

"The rich countries, the developed countries, this is their responsibility. They should come forward. But we are not getting that much response from them. That is the tragedy," she said.

"I know the rich countries; they want to become more rich and rich. They don't bother for others."

Bangladesh has produced a miniscule amount of the greenhouse gas emissions that have already contributed to the warming of the planet by an average of nearly 1.2 degrees Celsius above pre-industrial levels.

The Paris accord called for US$100 billion a year by 2020 from wealthy nations to help developing nations cope with climate change. That year, US$83.3 billion was committed, including through private sources, according to Organization for Economic Co-operation and Development figures.

One key issue facing the next UN climate summit, to take place in Egypt in November, is whether wealthy nations also need to pay for losses and damages from climate change - not just to pay for adaptation and mitigation.

"We want that fund to be raised. Unfortunately we didn't get a good response from the developed countries," Hasina said.

"Because they are the responsible ones for these damages, they should come forward," the 74-year-old added.

Wealthy nations have agreed only to discuss the loss and damage issue through 2024.

This year's General Assembly featured repeated calls for climate justice. The leader of tiny Vanuatu urged an international treaty against fossil fuels while the prime minister of Pakistan warned that floods that have swamped one-third of his country could happen elsewhere.

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"Local people also suffer a lot," Hasina said. "I can't say that they're angry, but they feel uncomfortable."

"All the burden is coming upon us. This is a problem."

The Rohingya refugees, who are mostly Muslim, live largely in ramshackle camps with tarpaulins, sheet metal and bamboo.

Bachelet on her visit said there was no prospect of sending them back to Buddhist-majority, military-run Myanmar, where the Rohingya are not considered citizens.

But in her interview, Hasina signalled that there were few options other than for the Rohingya to reside in camps.

"It is not possible for us to give them an open space because they have their own country. They want to go back there. So that is the main priority for everybody," Hasina said.

"If anybody wants to take them, they can take them," she added. "Why should I object?"

[Riaz Haq]

#India central bank chief Das raises interest rates 4th time in 2022, says global #economic outlook remains bleak, with #recession fears mounting & #inflation persisting at “alarmingly high levels”. #Indian forex reserves down $100 billion, #rupee weak. https://www.wsj.com/articles/indias-central-bank-calls-aggressive-m...

India’s central bank raised its key interest rate by half a percentage point, as efforts to rein in inflation and protect an economic recovery have been complicated by its currency’s decline against the U.S. dollar.

On Friday, the Reserve Bank of India raised its overnight lending rate to 5.90% from 5.40%, the fourth increase since it began raising rates following an unscheduled meeting in May, prompted by global inflationary pressures exacerbated by Russia’s invasion of Ukraine.

RBI Gov. Shaktikanta Das said that having witnessed the major shocks of the coronavirus pandemic and the conflict in Ukraine, the global economy is now in the midst of a third major shock arising from aggressive monetary policy tightening from advanced economies that is having spillover effects on the rest of the world.

“There is nervousness in financial markets with potential consequences for the real economy and financial stability,” Mr. Das said. “The global economy is indeed in the eye of a new storm.”

The pace at which the U.S. Federal Reserve has raised rates, coupled with growing fears of a global recession, have strengthened the dollar and heaped downward pressure on other currencies. The Fed approved its third consecutive interest-rate rise of 0.75 percentage point last week and signaled additional large increases as inflation remains stubbornly high. Central banks around the world continue to tighten their own monetary policy.

The British pound hit its lowest-ever level against the U.S. dollar this week as investors worried about the government’s plans to cut taxes and the Bank of England warned it would raise interest rates as much as needed to hit its inflation targets. The Chinese yuan slid to its weakest level against the dollar in more than a decade, and Japan intervened in the foreign-exchange market for the first time in 24 years to support the yen.

In India, the rupee is down about 9% this year against the dollar. Despite the RBI’s efforts to defend the currency, it slumped in July past 80 rupees per dollar to record lows. That defense has contributed to an almost $100 billion decrease in India’s foreign-exchange reserves over the past year to $545 billion. The RBI also attributes some of that decrease to the change in value of other currencies it holds.

Mr. Das said the global economic outlook remains bleak, with recession fears mounting and inflation persisting at “alarmingly high levels” across multiple jurisdictions.

“Central banks are charting new territory with aggressive rate hikes even if it entails sacrificing growth in the near-term,” he said.

Emerging-market economies in particular, Mr. Das said, are confronting challenges of slowing global growth, elevated food and energy prices, debt distress and sharp currency depreciations. Despite the unsettling global environment, he added, the Indian economy remains resilient.


Robert Carnell, Asia-Pacific chief economist at ING Bank, said a weak rupee was more troublesome from the point of view of imports becoming more expensive rather than from any external debt issue, given India’s debt levels remained relatively low.

Mahesh Vyas, the managing director of the Centre for Monitoring Indian Economy, said while the principal objective of the RBI’s currency intervention is to avoid volatility, support for the rupee for any given value is futile.

“Government efforts can delay the slide of the rupee but it cannot stop it,” he said.

[Riaz Haq]

Biden should act now on the wrecking-ball dollar
Washington could help to weaken the currency without undermining the Fed’s effort to contain US inflation
RUCHIR SHARMA

https://www.ft.com/content/38ca6bdd-068e-4fe2-a684-484a5725ad8d


The surging dollar has demonstrated its power over the world in recent months, exacerbating the stress in financial markets and in every country alarmed by the prospect of paying bills and loans in increasingly expensive greenbacks.

Most analysts attribute the dollar’s surge over the past year to rising US interest rates, which are necessary to fight inflation. But the dollar has become a wrecking ball, rising far higher than one would expect based on fundamentals, including the gap between interest rates in the US and the rest of the world. Its extraordinary spike is driven by investors who think the dollar is the only haven and speculators betting that it will keep rising.

Irrational behaviour has consequences. A dollar disconnected from fundamentals has no purpose, and can trigger a financial accident that tips the world economy into recession. This is the moment then for the Biden administration to abandon its indifference to the surging dollar, recognise its destabilising effects and rally countries to weaken the dollar by selling it.

Almost no one expects Washington to do this, because Biden aides have made clear they aim to help the Federal Reserve fight inflation in the US and believe that a strong dollar helps contain inflation by making imports less expensive. This logic is widely accepted.

It’s also largely wrong. Imports amount to 12 per cent of gross domestic product in the US, about a third the average for developed countries, and have a minor effect on US prices. More importantly, the dominant dollar is used to price most global goods including 95 per cent of US imports. Thus a change in the value of the dollar does little to change the price Americans pay for these imports.

This immunity is rare. Other countries pay more bills in foreign currencies and are more vulnerable to currency swings. When the dollar falls by one per cent, inflation rises in the US by just 0.03 per cent. When other currencies fall that far, inflation rises three times faster in other developed economies, and up to six times faster in emerging economies.

The key point is that the Biden administration could help to weaken the dollar without undermining the Fed’s effort to contain US inflation. In fact, America faces less risk from the dollar’s imaginary impact on US inflation than from its proven impact on the global economy.

Before last week the dollar had spiked more than 20 per cent in 12 months, matching or exceeding surges that accompanied the last seven major global financial meltdowns going back to the Latin American debt crisis of the early 1990s, and including the dotcom bust of 2001 and the global financial crisis of 2008.

These crises engulfed multiple countries including the US, disproving another piece of received American wisdom — that a strong dollar is a “problem” only for the rest of the world.

This year two out of three central banks in the emerging world are selling dollars, a record share since at least 2000. Japan has joined them, intervening directly in the currency market for the first time in a quarter century. But piecemeal national efforts to bolster their own currencies have less impact than co-ordinated intervention.

Since central banks including the Fed cannot — should not — stop raising interest rates until inflation is clearly under control, co-ordinated selling is the only tool left to ease the dollar-induced stresses still visible worldwide, from low-income countries to Europe.

US-led efforts to weaken the dollar have generally proved successful in the post-Bretton Woods era, particularly when these conditions are met: the dollar is seriously overvalued; speculators are heavily long the dollar; co-ordinated government intervention hits markets as a surprise; and central banks’ monetary policy is pushing currencies in the same direction.

[Riaz Haq]

Biden should act now on the wrecking-ball dollar
Washington could help to weaken the currency without undermining the Fed’s effort to contain US inflation
RUCHIR SHARMA

https://www.ft.com/content/38ca6bdd-068e-4fe2-a684-484a5725ad8d



Today chances of success are good. Though Fed policies are pushing up the dollar, it is now seriously overvalued, fuelled by high speculative positions, and co-ordinated intervention, which would be led by the US Treasury, would come as a shock.

Normally government meddling in currency markets is ill advised, but the dollar remains at irrational highs — by one measure nearly 40 per cent more expensive than at any point since 1980 — and a further rise could trigger a global recession.

The Biden administration has everything to gain by moving now. By acting to protect the US from the real risk of global recession rather than the imaginary risk of dollar-driven inflation, it would earn the plaudits of a world reeling from the administration’s hands-off dollar policy.

[Riaz Haq]

BD to become a trillion dollar economy: BCG

https://www.business-standard.com/article/international/bangladesh-...

Bangladesh is on course to become a $1 trillion economy by 2040, driven by consumer optimism, innovation in emerging economic sectors and a young engaged workforce, according to Boston Consulting Group.

With average annual growth of 6.4% between 2016 and 2021, the South Asian nation has outpaced peers such as India, Indonesia, Vietnam, the Philippines and Thailand, BCG wrote in a report released on Friday.

Bangladesh’s domestic consumer market is set to become the ninth-largest in the world. And a rapidly expanding middle and affluent class is projected to rise substantially between 2020 and 2025, the report said, with a robust gig economy propping up a workforce where the median age is just 28.

“The country could have easily been overshadowed by its neighbor to the northeast -- China -- or its continental cousin to the west -- India -- but in this region of economic powerhouses, Bangladesh stands tall,” BCG wrote.

Bangladesh progressed from a low-income to lower-middle-income country in 2015. Though that’s five years later than India, Bangladesh’s GDP per capita is already higher than its neighbor. The nation aims to become an upper-middle-income country by 2031.

Some challenges remain. Recent issues with liquidity, as well as foreign exchange and inflationary pressures, may slow growth in the short term, according to BCG. But Bangladesh has taken measures to position its $416 billion economy for a lucrative few decades, so long as it maintains an average growth rate of about 5%.

In a BCG survey analysis, 57% of respondents “continue to believe the next generation would have better lives than themselves, especially as the country transitions to a skill-based economy.”

“Though the economy faces some near-term volatility, we are confident that this highly resilient economy will continue to demonstrate robust growth in the long term,” the report said.

[Riaz Haq]

How political will often favors a coal billionaire and his dirty fossil fuel
The tale of Gautam Adani’s giant power plant reveals how political will in India bends in favor of the dirty fuel
By Gerry Shih, Niha Masih and Anant Gupta

https://www.washingtonpost.com/world/2022/12/09/india-coal-gautam-a...


GODDA, India — For years, nothing could stop the massive coal-fired power plant from rising over paddies and palm groves here in eastern India.

Not objections from local farmers, environmental impact review boards, even state officials. Not pledges by India’s leaders to shift toward renewable energy.

Not the fact that the project, ultimately, will benefit few Indians. When the plant comes online, now scheduled for next week, all of the electricity it generates is due to be sold at a premium to neighboring Bangladesh, a heavily indebted country that has excess power capacity and doesn’t need more, documents show.

The project, however, will benefit its builder, Gautam Adani, an Indian billionaire who according to Global Energy Monitor is the largest private developer of coal power plants and coal mines in the world. When his companies’ stock peaked in September, the Bloomberg Billionaires Index ranked Adani as the second-richest person on the planet, behind Elon Musk.

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One of the power projects would be built by Adani, who had provided a corporate jet for Modi to use during his political campaign and accompanied the newly elected prime minister on his first visits to Canada and France. After Modi’s trip to Bangladesh, that country’s power authority contracted with Adani to build a $1.7 billion, 1,600-megawatt coal power plant. It would be situated 60 miles from the border, in a village in Godda district.

At the time, the project was seen as a win-win.

For Modi, it was an opportunity to bolster his “Neighborhood First” foreign policy and promote Indian business. Modi asked Bangladesh’s prime minister, Sheikh Hasina, to “facilitate the entry of Indian companies in the power generation, transmission and distribution sector of Bangladesh,” according to an Indian Foreign Ministry readout of their meeting.

For her part, Hasina envisioned lifting her country into middle-income status by 2020. Electricity demand from Bangladesh’s humming garment factories and booming cities would triple by 2030, the government estimated.


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Facing a looming power glut, Bangladesh in 2021 canceled 10 out of 18 planned coal power projects. Mohammad Hossain, a senior power official, told reporters that there was “concern globally” about coal and that renewables were cheaper.

But Adani’s project will proceed. B.D. Rahmatullah, a former director general of Bangladesh’s power regulator, who also reviewed the Adani contract, said Hasina cannot afford to anger India, even if the deal appears unfavorable.

“She knows what is bad and what is good,” he said. “But she knows, ‘If I satisfy Adani, Modi will be happy.’ Bangladesh now is not even a state of India. It is below that.”

A spokesman for Hasina and senior Bangladeshi energy officials did not respond to a detailed list of questions and repeated requests seeking comment.

[Riaz Haq]

‘Modi’s Rockefeller’: Gautam Adani and the concentration of power in India
Critics say his rise is symbolic of a system where too much power is in the hands of too few

https://www.ft.com/content/474706d6-1243-4f1e-b365-891d4c5d528b

By Stephanie Findlay in New Delhi and Hudson Lockett in Hong Kong NOVEMBER 12 2020




When the Indian government approved the privatisation of six airports in 2018, it relaxed the rules to widen the pool of competition, allowing companies without any experience in the sector to bid. There was one clear winner from the rule change: Gautam Adani, the billionaire industrialist with no history of running airports, scooped up all six.

His clean sweep was met with outrage. The Kerala state finance minister said Mr Adani winning the 50-year lease to operate the Trivandrum International Airport was an “act of brazen cronyism” that showed how the central government favoured politically connected tycoons. India’s aviation minister replied that the open bidding process was carried out in a “transparent manner”.

Overnight Mr Adani became one of the country’s biggest private airport operators. He is also its largest private ports operator and thermal coal power producer. He commands a growing share of India’s power transmission and gas distribution markets, and this year announced that his renewables arm Adani Green Energy would invest $6bn to build solar plants with a capacity of 8GW, one of the largest renewables projects in the world.


Along with Reliance Industries chairman Mukesh Ambani, Mr Adani is today one of the most visible tycoons in the country, whose prominence has accelerated in the years since Narendra Modi was elected prime minister in 2014. Like both Mr Modi and Mr Ambani, Mr Adani comes from the western state of Gujarat, where he was a key supporter of Mr Modi and his ruling Bharatiya Janata party as it rose to dominate national politics.

When Mr Modi took office, he flew from Gujarat to the capital New Delhi in Mr Adani’s private jet — an open display of friendship that symbolised their concurrent rise to power. Since Mr Modi came into office, Mr Adani’s net worth has increased by about 230 per cent to more than $26bn as he won government tenders and built infrastructure projects across the country. “Nation building” is Mr Adani’s motto and he likes to talk about helping India achieve energy security.



But as New Delhi accelerates its privatisation drive to offset the severe economic shock of the coronavirus pandemic, Mr Adani’s mushrooming empire has become a focus of criticism for those who believe that capital is being concentrated in the hands of a few favoured corporate titans at the expense of India’s middle class.

Some argue the concentration of economic power in family-run conglomerates is a way to fast-track India’s economic development, like the chaebol did for postwar South Korea. But critics say the rapid consolidation of state assets is creating monopolies and stifling competition.

“Is India going to move towards the east Asian model or the Russian model? So far the tendency looks towards the latter [more] than the former,” says Rohit Chandra, assistant professor of public policy at the Indian Institute of Technology Delhi. “It’s not clear whether India’s concentration of capital will lead to the long-term benefit of Indian consumers.” 




Whether India’s industrialisation leaves it more closely resembling the US at the turn of the 20th century when the likes of oil magnate John D Rockefeller wielded vast influence, or Russia in the 1990s, Mr Adani’s voracious appetite for dealmaking and political instincts have ensured he will play a central role.


“Gautam Adani is very powerful, very politically well connected and very astute at using that power,” says Tim Buckley, an energy analyst based in Australia who tracks India. “He is Modi’s Rockefeller.”