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Adani Saga: The Larger Picture

Business -government is an essential trait of all neoliberal regimes, all across bevy of nations; it has a historical legacy in India, as elsewhere. — KK Srivastava

 

The opposition, and its ilk, is wringing hands with glee; it is glancing at Modi government with the look of consternation. The former thinks that the Adani saga has caused the ruling dispensation much embarrassment. But no government of the day infact has been immune from the business-political nexus ever. Government has always shaped the economic events of the nations as it pleases, while the industry regulators have always been powerless to act notwithstanding all the righteousness that they exhibits. 

The opposition, mainly Congress, can hardly claim that BJP is (uniquely) promoting cronyism. In fact since independence it has been a larger theme benefitting the top 4-5 corporates and not merely in India - the story has been witnessed in America, S. Korea, even China. While the players (of the club) keep changing from time to time, there are some constants and some replacements. These players run the empire called conglomerates. These empires are a direct offshoot of the neoliberal policy regime adopted by the capitalist countries.

Neoliberalism is the idea, in economic sphere, associated with free market capitalism advocating the policies of economic liberalisation, including privatisation, deregulation, globalisation, free trade, monetarism, and reductions in government spending in order to increase the role of the private sector in the economy (and society). It has a number of distinct usages in different domains. Thus, as a development model it favours the Washington consensus and discards the structuralist economics. As an ideology it equates freedom with reducing role of state to a bare minimum. And as a public policy it seeks to provide the private sector a prime role (by promoting liberalisation, privatization, deregulation, and globalisation), while seeking to reduce public spending.

It is complete myth that capitalism, as Adam Smith hypothesized, is driven by the invisible hand of the market. Business-government links abound. However, there is a difference between advanced capitalism and nascent capitalism. In the latter the favourable government policies tend to be industry specific, not firm - or family – specific. Besides, such nexus between government and business cannot go far; it is neither widespread nor as rampant since the regulations work firmly in advanced economies. In contrast initial capitalism is accompanied by corruption. Thus while there are forces of dynamism a rot of some kind also sets in. While the businesses pursue their own agenda, they do so comfortably because they line the pockets of ruling executives. This may be done in four ways. One, low level bureaucracy extracts rent on one hand and embezzles public fund on the other. Two, political elites indulge in grand theft. Three petty bribes are received by bureaucrats to waive the objections initially put by them. Finally, businessmen obtain big contracts by providing different benefits to the ruling elite (politicians and bureaucrats), but do raise over all investment rank and promote economic growth. The last type of irregularity may be seen through a benign eye. Particularly in India, Indian big business has flourished in areas where the rulers otherwise have a large interventionist role. The scandals in the telecom sector have not been erased from public memory that stigmatized the earlier Congress regime. While the CAG has raised questions in sundry cases in all regimes, these have not been addressed. 

While much of the criticism that Adani faces originates from its (some would say, alleged) proximity to Modi government, the fact remains that running a business empire is nearly impossible without a supportive government. But that is not the point; when it borders on cronyism, then the questions are raised. Let’s face it, can even big Indian conglomerates (Adani, Ambani, Birla — only a select list) compete overseas without the Indian government working closely with them? What is after all the Belt and Road Initiative of China; along with cheap access of funds to Chinese businesses? Infrastructure projects need businesses with deep pockets, large balance sheets, and more importantly, friends in the government. Business conglomerates generally work under the government shadow since in India they mostly operate in domestic market. And they need government support. Let’s face it, given the strict environment norms which company can overcome environmental hurdles without the government of the day turning a blind eye. Recall, the Tata’s building of Dhamra Port in the earlier UPA regime.

So, while it may be difficult to consent with some supporter of BJP who suggest that ‘Adani is India’, it is equally silly to ignore the fact that in the present neoliberal regime all businesses need a government which extends a helping hand. All regime have had their favourites, Birlas, Tatas, Ambanis, and now Adanis; they have reached where they did, partly, because of political patronage. While the political parties need funds to fight elections, businesses need political patronage to carry on with their business. No doubt there are individual entrepreneurs who have grown due to their professionalism and business acumen, but beyond a point an interface with all mighty government is inevitable. All businesses, especially in India, need a friendly government to advance. Like it or not capitalism has always been defined, at least in its early stages by cronyism, including in authoritarian regime like China. When India adopted the licence- permit-control Raj (which has not vanished in its entirety even today) which has now been replaced by regulation and investigation Raj, the seeds of crony capitalism were sown and the plant is flourishing. 

Allegations abound that Adani was aided and abetted by a friendly ruling regime. But the counter question that needs to be asked is which business in India has survived and thrived without the necessary political patronage? Only the favourites might have changed with change of regimes Adani has benefited because financial capital, including the foreign one, was easily accessible in the bond and equity market (resulting in excess liquidity available with banks) and it was ready to finance even infrastructure projects – earlier considered risky – which Adani ventured into. On the other hand government too decided to incentivize private sector participation through favourable policy regime. Those empathetic to Adani would say he smelled the opportunity before others could. And it did not hurt that government helped. So while the charges of crony capitalism being practised may not be without substance, to attribute this allegation uniquely to the present regime or the most shining business group of the day would tantamount to hiding some facts and distorting others.           

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