What does Adani’s downfall tells us about the Indian economy?

Concerns over the billion-dollar company have put the spotlight on the relationship between Gautam Adani and Indian Prime Minister Narendra Modi.

Adani Group chairman Gautam Adani and Indian PM Narendra Modi (Images: AP, EPA)
Adani Group chairman Gautam Adani and Indian PM Narendra Modi (Images: AP, EPA)

A staggering sell-off of the stocks of Indian conglomerate Adani Group was sparked in late January by a report released by Hindenburg Research that raised questions about the group’s debt levels and use of tax havens. The Adani Group’s stocks declined more than 50% in the aftermath of the report’s publication, and those declines have had a massive effect on the wealth of the company’s namesake, Gautam Adani, who had previously been the world’s third-richest person and Asia’s richest overall.

The Adani Group has denied the allegations, saying they have “no basis”. But the controversy has focused attention on the group’s central role in the Indian economy and its founder’s close relationship with Indian Prime Minister Narendra Modi.

What accounts for Adani’s rise in the first place? What is the basis for his close relationship with Modi? And what role does the Adani Group play in the Indian economy? Those are a few of the questions that came up in my recent conversation with Foreign Policy economics columnist Adam Tooze on the podcast we co-host, Ones and Tooze. What follows is an excerpt, edited for length and clarity.

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