Modi Alleges Without Evidence Adani, Ambani Gave Illegal Cash

Prime Minister Narendra Modi made unsubstantiated allegations that India’s main opposition party received illegal cash from billionaires Mukesh Ambani and Gautam Adani, escalating his rhetoric in the middle of a heated election battle.

Modi made the claims at a rally in southern Telangana state Wednesday, hinting that Rahul Gandhi, a senior leader in the Indian National Congress, had stopped criticizing Adani and Ambani in his speeches because his party is receiving money from them. Modi didn’t provide any evidence to back up the allegation.

“For five years you cussed out Ambani and Adani, and overnight the cussing has stopped?” Modi told the crowd in Hindi, without mentioning Gandhi by name.

Congress party officials said Modi’s comments suggest he may be concerned about the voting trend for the ruling Bharatiya Janata Party so far and is turning against his allies.

Both Ambani and Adani have widespread business interests in the country that align with the government’s policy agenda. Gandhi has consistently questioned Modi’s links with the tycoons and criticized policies he says have favored wealthy businessmen over the poor, resulting in widening inequality levels in the country. At a campaign rally on Tuesday in Jharkhand, Gandhi said the media’s attention is focused on Ambani, Adani and Modi, but not the poor.

The prime minister, who is seeking a third term in elections that run until June 1, rarely mentions the billionaires names in his speeches. On Wednesday, he alleged they had been funding Gandhi and the Congress party since the elections began on April 19.

Congress President Mallikarjun Kharge said on social media platform X that Modi is “shaking” and “attacking his own friends.” Jairam Ramesh, the party’s national spokesman, said the billionaires have benefited from Modi’s policies and the opposition will continue to push for investigations into the prime minister’s links to the businessmen.

Representatives for Ambani’s Reliance Industries Ltd. and Adani Group weren’t available to comment when contacted by Bloomberg News.

Neelanjan Sircar, a senior fellow at the Centre for Policy Research, a policy think tank, said Modi may be trying to deflect attention from his links to the wealthy businessmen and what they represent in a country of wide income disparities.

“Part of the reason is to muddy the waters and to try to delink the public perception of the BJP and Modi from the public imagination of what Adani and Ambani do,” he said. “They represent extreme inequality. They flaunt their wealth.”

Election funding in India is notoriously opaque. Only a small percentage is declared publicly, according to election watchdogs, with the vast amount unaccounted for and labeled black money. In April, the Election Commission of India said it confiscated 46.5 billion rupees ($557 million) of illicit money and goods in the run up to voting.

Modi’s comments come a day after India held the third phase of its seven-phase elections. The prime minister and BJP officials have ramped up attacks on the opposition that have drawn condemnation for being discriminatory. At a rally last month, Modi told supporters that if voted to power, the Congress party would redistribute wealth to Muslims and “infiltrators.”

This week, the BJP in Karnataka province posted an animated video that showed the Congress party favoring Muslims over other minority groups. The Election Commission of India on Tuesday ordered social media platform X to remove the video.

Apoorvanand, a professor at the University of Delhi who goes by one name and writes regularly on politics, said Modi’s comments suggest he’s trying to “confuse the electors, muddy the waters so that voters cannot think clearly.”

That’s when billionaires and movie stars from around the world jetted to Jamnagar, overwhelming its small airport with private planes and chartered flights. They were all there to party with Asia’s richest man, Mukesh Ambani.

The 67-year old chairman of India’s most valuable private company Reliance Industries had thrown a lavish pre-wedding bash for his son, welcoming around 1,200 guests from Silicon Valley, Bollywood and beyond. Mark Zuckerberg, Bill Gates and Ivanka Trump were among the many high-profile celebrities in attendance.

The three-day celebration, which saw performances by popstar Rihanna and magician David Blaine, transfixed India and further underscored Ambani’s growing global clout.

But Ambani was not the only Indian businessman at the bash whose staggering influence and riches are reshaping the world’s most populous country.

Fellow billionaire Gautam Adani, founder of the Adani group, was also invited. The infrastructure tycoon has stunned the world with his supercharged rise in the last decade. In 2022, he briefly ousted Jeff Bezos as the world’s second-wealthiest person.

“They are phenomenal … entrepreneurs, who have been able to sustain steady growth and development in a vibrant yet sometimes chaotic political and business environment that exists in India,” said Rohit Lamba, an economist at Pennsylvania State University.

Investors have been cheering the duo’s ability to adroitly bet on sectors prioritized for development by Prime Minister Narendra Modi, currently campaigning for his third consecutive term to lead India.

The South Asian country is poised to become a 21st-century economic powerhouse, offering a real alternative to China for investors hunting for growth and manufacturers looking to reduce risks in their supply chains.

Reliance Industries and the Adani Group are sprawling conglomerates worth over $200 billion each, with established businesses in sectors ranging from fossil fuels and clean energy to media and technology.

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“They are phenomenal … entrepreneurs, who have been able to sustain steady growth and development in a vibrant yet sometimes chaotic political and business environment that exists in India,” said Rohit Lamba, an economist at Pennsylvania State University.

Investors have been cheering the duo’s ability to adroitly bet on sectors prioritized for development by Prime Minister Narendra Modi, currently campaigning for his third consecutive term to lead India.

The South Asian country is poised to become a 21st-century economic powerhouse, offering a real alternative to China for investors hunting for growth and manufacturers looking to reduce risks in their supply chains.

Reliance Industries and the Adani Group are sprawling conglomerates worth over $200 billion each, with established businesses in sectors ranging from fossil fuels and clean energy to media and technology.

As a result, these three men — Modi, Ambani and Adani — are playing a fundamental role in shaping the economic superpower India will become in the coming decades.

Some spaces need no names or bright labels, but their affiliations are just as obvious. Everyone in Mumbai knows who lives in Antilia — the personal skyscraper of Ambani and his family, which reportedly cost $2 billion to build and boasts a spa, three helipads and a 50-seat theater. The 27-story building sits on a street dubbed “Billionaires’ Row,” its jutting geometric architecture looming over the neighborhood.

The kind of power and influence these Indian tycoons enjoy has been seen before in other countries experiencing periods of rapid industrialisation.

 

Both Ambani and Adani are often compared by journalists to John D Rockefeller, who became America’s first billionaire during the Gilded Age, a 30-year period in the last decades of the 19th century.

During those decades, industrialists saw their fortunes ascend to staggering heights thanks to the rapid expansion of trains, factories and urban centers across America. Other famous names including Frick, Astor, Carnegie, and Vanderbilt also shaped the country’s infrastructure.

More recently in Asia, “chaebols” or giant family-run conglomerates have dominated the South Korean economy for decades and many of them, including Samsung and Hyundai, have become global leaders in semiconductors and autos.

“India is in the middle of something that America and lots of other countries have already gone through. Britain in the 1820s, South Korea in the 1960s and 70s, and you could argue China in the 2000s,” said James Crabtree, the author of The Billionaire Raj, a book about India’s wealthy.

It is “normal” for developing nations to go through such a period of rapid growth, which sees “income accumulation at the very top, rising inequality and lots of crony capitalism,” he added.

The Indian economy has many of those characteristics.

Worth $3.7 trillion in 2023, it is the world’s fifth largest economy, jumping four spots in the rankings during Modi’s decade in office and leapfrogging the United Kingdom.

It is comfortably placed to expand at an annual rate of at least 6% in the coming few years, but analysts say the country should be targeting growth of 8% or more if it wants to become an economic superpower.

Sustained expansion will push India higher up the ranks of the world’s biggest economies, with some observers forecasting the South Asian nation to become number three behind only the US and China by 2027.

Despite these successes, soaring youth unemployment and inequality remain stubbornly persistent problems. In 2022, the country ranked a lowly 147 on gross domestic product (GDP) per person, a measure of living standards, according to the World Bank.

Coal to solar, oil to internet

To spur growth, the Modi government has begun a massive infrastructure transformation by spending billions on building roads, ports, airports and railways.

It is also heavily promoting digital connectivity, which can improve both commerce and daily life.

Both Adani and Ambani have become key allies as the country embarks on this revolution.

“These conglomerates are very, very important and very well connected,” said Guido Cozzi, professor of macroeconomics at the University of St Gallen in Switzerland, noting that both the Adani Group and Reliance Industries were founded years before Modi came to power.

“They are not typical stagnant monopolistic conglomerates. They are pretty dynamic,” Cozzi said. Not only are they playing “an important role” in building infrastructure, which helps “growth directly,” the two business groups are also helping the country expand “indirectly” by boosting connectivity through digital innovation, he explained.

Reliance was founded by Ambani’s father, Dhirubhai, as a small yarn trading firm in Mumbai in 1957. Over the next few decades, it grew into a colossal conglomerate spanning energy, petrochemicals and telecommunications.

After his father’s death, and following a bitter feud with his younger brother, Ambani inherited the company’s main oil and petrochemicals assets. He then spent billions transforming it into a tech juggernaut.

In less than a decade, Ambani has not only upended India’s telecom sector, but also become a top player in sectors ranging from media to retail.

‘Too big to ignore’

Ambani and Adani are considered vocal champions of Modi. Prominent politicians from opposition parties in India have often questioned Modi’s ties with India’s super-rich, and the meteoric rise of Adani becoming a fraught issue last year.

 

In January 2023, the group was rocked by an unprecedented crisis when an American short-seller Hindenburg Research accused it of engaging in fraud over decades.

Adani denounced Hindenburg’s report as “baseless” and “malicious.” But that failed to halt a stunning stock market meltdown that, at one point, wiped more than $100 billion off the value of its listed companies.

Political leaders from India’s main opposition party ferociously questioned Adani’s relationship with the prime minister, and some even said that they were punished for pursuing the issue.

Since then, Adani has made a remarkable comeback, with shares in some of his companies touching record highs. Despite the scandal, the group has also managed to attract billions from new foreign investors, including US private equity firm GQG Partners.

“While that report brought to light serious concerns, we believe the company has taken actions to reduce liquidity risk, improve governance, and increase transparency,” Cantor said in its report. “Thus, at this juncture, we believe Adani is too big to ignore, and for India, we believe the country needs Adani as much as Adani needs the country.”

Now, as India votes, Modi’s perceived relationship with the billionaires is once again being questioned by rivals.

Prasanna Tantri, associate professor of finance at the Indian School of Business, said he does not have “reason to believe that things have become worse than before” when it comes to crony capitalism in India.

Some processes, particularly more transparency in allocation of India’s natural resources and the overhauling of the country’s bankruptcy laws, have been important reforms under Modi, he added.

Experts say that some amount of closeness between politicians and business elite can help in growing the nation faster.

“The optimal level of corruption in an economy is never zero,” said Crabtree, adding that India needs to build more independent institutions that can keep it under control.

However, unchecked dominance of such enormous groups may choke competition and innovation, and ultimately lead to stagnation in an economy.

The new government needs to encourage entrepreneurship and innovation by making it easier for smaller firms to raise money and getting rid of archaic laws, including land and labor rules, that can get in the way of doing business. Failing to do so, could stifle India’s future growth.

A few big conglomerates cannot absorb the million people joining the labor force every month, said Lamba, who is also co-author of Breaking the Mould, a 2023 book that examines how Asia’s third largest economy can grow faster.

“India cannot grow rich before it becomes old on the back of a few big firms like Adani or Ambani,” he said. “India should make more firms.”