Modi government cancels Rs 200cr penalty: Achhe din for Adani only?

Apoorva Pathak
Apoorva PathakJul 03, 2016 | 12:21

Modi government cancels Rs 200cr penalty: Achhe din for Adani only?

Fifty-five-year-old Gautam Adani is not just amongst the richest Indians – being the owner of Adani Group that among other things operates India's largest private port and is India's largest private electricity producer – but he is also perhaps the most powerful and politically influential man in the country.

His rise has corresponded with that of Narendra Modi. Their cordial relation has come under much public scrutiny and yet it has flourished despite critical attacks from opposition. The mutually beneficial relation has again come under the scanner with the Business Standard reporting how Rs 200 crore fine on Adani has been withdrawn by the Prakash Javadekar-led environment ministry.


The decision raises many eyebrows about how Adani group has repeatedly been the beneficiary of government's largesse due to his proximity to Modi. But before we discuss the various favours Adani has been bestowed, it's imperative to discuss how he came to be the blue-eyed boy of Narendra Modi.

Gautam Adani has a long history of being an ardent backer of Modi. But delving on the following instances can help cut the long story short and help us understand how Adani managed to get Modi's confidence.

Rare support post 2002 riots

The time after 2002 Gujarat riots was among the most difficult in Modi's career. His own party's prime minister, Atal Bihari Vajpayee, was preaching “raj dharma” to him; their were calls for his ouster and industrialists shunned him.

After Modi was criticised by a group of industrialists belonging to CII, Adani created a rival body - Resurgent Group of Gujarat - in protest. Adani also was a key backer of the Vibrant Gujarat summits that were instrumental in creating the fandom around Gujarat Model that underscored Modi 2014 campaign.

Adani invested with an open heart right in the aftermath of 2002 riots and thus helped in the arduous task of transforming Modi's image. So as the man who stood by Modi when he was dubbed a pariah, Adani began what was to turn into a long and mutually beneficial relation for both Modi and himself.


Withdrew financial support to Wharton

In 2013, America’s prestigious Wharton Business School cancelled Modi's keynote speech after objections arose due to the then prime ministerial candidate’s murky past record. Again Adani was quick to stand by Modi and promptly cancelled his financial support for Wharton as a payback.

Such unequivocal show of support and use of money power in favour of Modi very early in his 2013 campaign further consolidated his relation with Modi.

Liberally aided Modi's PM campaign

Adani was said to be amongst the largest contributors to the most expensive election campaign that brought Modi to power in May 2014. Modi also often used Adani’s jets to criss-cross the country for his high-voltage campaign. Even when he was coming to Delhi after his stupendous victory, Modi used Adani's private jet to make that historic arrival.

Post his landslide victory, PM Narendra Modi leaves for Delhi in a private jet owned by Gautam Adani.  

So in light of this enduring support to Modi from Adani, many critics raised questions about what was in it for the Gujarat-based global industrialist? Modi baiters even alleged there was a quid pro quo where Adani would be showered with benefits by Modi for the help the canny businessman has rendered to the NDA prime minister.


While whether there indeed has been a quid pro quo is a question best left to public speculation, following instances do give a strong impression that Modi sarkar has meant acche din only for Gautam Adani and his industries.

Environment ministry waives UPA-era fine

After an investigation conducted in 2012, UPA government had imposed Rs 200 crore fine on Adani Group of Indistries for the environmental violations done during the Mundra Project. 

The case pertains to the “destruction of local ecology, mangroves, creeks and illegal reclamation of land,” unearthed by the Sunita Narain Committee that was set up to investigate the company’s Mundra project in Gujarat," the report says.

After the investigation, the Committee recommended a ban on the Mundra project’s North Port, the report says, and sought a fine of Rs 200crore or 1 per cent of the project cost, whichever was higher.

The then Gujarat government under Modi opposed the fine but UPA imposed it nonetheless creating cheers amongst the environmentalists. But now it has emerged that the environment ministry has secretly withdrawn the Rs 200crore penalty, thereby causing a direct benefit to the Adani group.

The action of the ministry raises serious questions and is a scandal that has not yet got the attention it urgently deserves.  

Adani has supported Modi since 2002 and looks like it's payback time now. 

Trampling on tribal rights for Adani's mining project in Chhattisgarh

How Modi Raj has meant acche din only for Adani was also seen in the extraordinary length to which the Narendra Modi goverment has gone to support Adani's stuck mining project in Chhattisgarh. 

The case involves tribal forestland, where Adani's mining project is primed to come up. The tribals, who under the Forest Rights Act, have claim to community rights over the forest land and twice have made clear their staunch opposition to the project, have met with a hostile state government, under chief minister Raman Singh, which has interfered on the side of Adani group.

The dispute went up to the ministry of tribal affairs for scrutiny where different layers of bureaucracy and officers in fact upheld the case of tribals.

But in came the newly appointed tribal affairs secretary, who then promptly used his veto and in a questionable interpretation held that forestland, where tribal community rights is yet to be settled, can be diverted for mining projects (currently, diversion of tribal community land is prohibited under law).

As the issue of this forestland, like the 98 per cent of potential community forest rights area, remains to be settled, this decision can seriously undermine tribal land rights throughout the nation.

Also, it can be a big loss for India's already dwindling forest cover.

But once again, the rights of our tribal people as well as India's environmental well being seem to have been sacrificed at the altar of politically connected corporate interest.

This again raises question as to why tribal rights are being so brazenly overlooked. What changed suddenly that tribal affairs ministry altered it long-held position?

Forcing SBI to finance Adani's controversial Australian project

In November 2014, Adani group signed an MoU with the public sector giant State Bank of India for a one-billion-dollar loan for its questionable Australian mining project.

The deal raised many questions.

SBI signed the MoU after nine of the world's top banks refused to finance the deal due to its adverse potential ecological impact. Moreover, the project has been surrounded with controversy and was a coalmining project with an unduly long gestation period in a sector that is witnessing decline with move towards sustainably sources.

Narendra Modi isn't pro-business, he is pro-Adani, if the favours curried by the tycoon are anything to go by. 

It’s obvious that this was not a very prudent lending decision, so why did SBI rush into it? Also, since the project is anyway not based in India, wouldn't it have been wiser for SBI to fulfill the credit needs of cash-starved Indian projects, from which the country can directly benefit than funding a project which was ecologically disastrous, economically imprudent and didn't aid Indian objectives? 

Only after much furore was the MoU cancelled, but by then it had again reinforced the perception that Modi Raj meant acche din only for Adani.

Adani Group got land at cheapest rates in Modi's Gujarat

Modi's rule had been profitable for Adani even in the former’s Gujarat days. Gujarat government under chief minister Modi gave land for Adani's SEZ at the cheapest rate, which varied from Rs 1 to Rs 32 per metre.

This was much cheaper than the rate at which other industries got land. Tata Motors was given 1,110 acres for its Nano car plant in Sanand (near Ahmedabad) at Rs 900 per sq mt; Ford India paid at Rs 1,100 per sq mt for 460 acres close by; while India’s largest carmaker, Maruti Suzuki, bought about 700 acres in Hansalpur at Rs 670 per sq mt.

Among other industrial groups, K Raheja Corp was sold land at Rs 470 per sq mt, while TCS had to pay at Rs 1,100 per sq mt and Torrent Power at Rs 6,000 per sq mt. (one acre equals 4,046.86 square metres).

Apart from getting the land at cheapest rate, Adani also got the land without any hassle as unlike other projects he was given non-agricultural land where there were no acquisition troubles.

Again its raises question as to what prompted Modi to give such undue favour to the Adani group?  Why was it treated so specially? Why were the assets of the state sold off cheaply without realising their true price? 

CAG exposed undue benefits GSPC gave to Adani

The acche din for Adani under Modi also had come under CAG scrutiny. In its report, CAG had pulled up GSPC for giving undue benefits to the tune of Rs 70 crore to Adani. This happened when Modi was the CM and controlled GSPC. This again raises question about how the public wealth is transferred to private entities that enjoy political patronage. 

From the above-discussed cases, it is clear that Adani Group has constantly gained from the cosy relation that Gautam Adani enjoys with Narendra Modi. Such politician-businessmen nexus has been the bane of democracies throughout the world.

In this case, it raises many disturbing aspects. 

It puts a big question mark over Modi's commitment to environment as Adani Group in its various ecologically damaging projects (Mundra project and Adani's Australian coal mining deal imperiling the Great Barrier Reef being the latest examples) have received Modi's overt support (withdrawal of fine and SBI signing MoU). 

Also state's interventions in favour of certain corporates by giving them cheap land and other freebies distort free market and reduces growth as inefficient economic players with state patronage grow rather than the most efficient producers. This again raises doubt about Modi's image of being an economic reformer. 

Such cosy relation also provides immunity to such powerful tycoons and thereby endangers rule of law. When an Adani can get away with damaging the environment, it sends an impression that some are more equal than others.

Rule of law rests on the notion that be you ever so high, the law is above you. So, when certain individuals seem to be above the law, incalculable harm is done to the rule of law.

Also the oversized influence of a few at the cost of many denigrates democracy. Everyone should have equal access to policy-making in democracy but the nexus between netas and tycoons lead to some getting staggering influence over policy.

Democracy, it must be understood, is government by the people, for the people and not government by the cronies and for the cronies. 

The good fortunes that Adani has enjoyed under Modi should make Modi worry and not just for the disturbing and fundamental questions such cosy relations raises.

Slowly but steadily it also is leading to the electorally damaging impression gaining ground that in Modi government, it's acche din only for Adani. 

Last updated: July 04, 2016 | 15:36
Please log in
I agree with DailyO's privacy policy