Adani prospers as Modi stresses development

Written by Reuters | Ahmedabad | Updated: Apr 11 2014, 10:58am hrs
The way billionaire infrastructure-builder Gautam Adani sees it, working with the government does not make him a crony-capitalist.

Adanis rapid ascent to the top tier of Indian business is often associated with the rise of Narendra Modi, the Hindu nationalist opposition leader widely expected to become Indias next prime minister once the countrys election ends next month.

Critics dislike Modis authoritarian tendencies and attitude towards religious minorities, most notably Muslims, while big businesses admire the chief minister of Gujarats ability to get things done.

Based in the western state, Adanis empire has benefitted from Modis emphasis on economic development, but the tycoon bristles at the notion that he has been granted undue favours.

Crony capitalism should not be there. I definitely agree with that. But how you define crony capitalism is another issue, Adani, 52, said in a recent interview in his office in Ahmedabad, Gujarats commercial capital.

If you are, basically, working closely with the government, that doesnt mean its crony capitalism, said Adani, whose companies have built a chunk of the infrastructure that has helped make Gujarat an industrial powerhouse.

Shares in Adani firms have surged on what traders say are bets the group would perform well under a Modi-led government.

Its flagship Adani Enterprises soared 22.9% for its biggest daily gain on Thursday and has nearly doubled since the start of February, compared with a nearly 20% gain in the infrastructure index.

Cosy ties between business and politics are a key issue in Indian elections that began on Monday after a spate of scandals weakened the Congress party government, paralysed decision-making and stifled investment.

Popular anger over corruption fuelled the rise of the Aam Aadmi (Common Man) Party, which rails against what it says is rampant crony capitalism in India.

With speedy bureaucracy and 24-hour power in a country notorious for red tape and blackouts, Gujarat is a magnet for investment as well as criticism that the playing field is tilted too much in favour of industrialists like Adani.

These improvements in infrastructure and governance are mainly for the corporate sector, said Indira Hirway, director of the Center for Development Alternatives in Ahmedabad.

For other sectors, for the masses, and particularly for the poor, the infrastructure is not doing that well, she said, referring to issues such as drinking water, sanitation, and social infrastructure.

A college dropout and self-made entrepreneur in a country where industrial wealth is often inherited, Adani has built a power, mining and ports giant with $8.7 billion in revenue.

Adani has stepped up its operations outside Gujarat in recent years with hefty investments in Australia and elsewhere in India, but it is the vast port and special economic zone at Mundra, a once-remote coastal town on the Gulf of Kutch in Gujarat, that is Adanis crown jewel and where opponents say the government favoured it with cheap land.

Borrowing heavily, Adani sank billions of dollars into an area with large swathes of marshy wasteland, making it the first Indian commercial port to claim 100 million tonnes in annual cargo handled. In Mundra, Adani also built Indias largest privately-owned power plant, producing 4,620 MW of power, and a 64-kilometre railway connecting the port to Indias dilapidated network.

During a visit, the scale and variety of operations was clear: trucks carrying giant logs headed out, while huge heaps of imported coal awaited shipment to power plants and rows of Maruti Suzuki cars were parked on a lot for export.

The state government, Adani said, has been a facilitator.

You can say very well that land has been given to Adani, said Adani, wearing a white short-sleeved shirt over dark trousers and black loafers. So what Has Adani taken away land and not developed anything

As chief minister since 2001, Modi has aggressively courted investment and capitalised on Gujarats robust economy to put his Bharatiya Janata Party (BJP) in a winning position for the election that started Monday and ends next month.