The Great Indian Debate — Day 52 Are Adani and Ambani too close to state power?
THE STAKES In January 2023, the Hindenburg Research report accused the Adani Group of stock manipulation and debt-fueled expansion, triggering a ₹12 lakh crore market rout. The Supreme Court later formed an expert committee to probe regulatory lapses, but its report—released in May 2023—stopped short of alleging cronyism, instead pointing to "systemic risks" in India’s capital markets. Meanwhile, Reliance Industries’ Jio Platforms has become the backbone of India’s digital infrastructure, with the government repeatedly extending spectrum payment deadlines for telecom operators—benefiting Reliance the most. These aren’t isolated incidents. They force a question: Has India’s economic rise become inseparable from the fortunes of a few conglomerates, and if so, what does that mean for the rest of us?
THE ARGUMENT FOR The case that Adani and Ambani wield disproportionate influence over state power rests on three pillars: policy tailwinds, regulatory forbearance, and the revolving door between government and corporate boardrooms.
First, the policy advantages. The Adani Group’s ports handle 30% of India’s cargo, and its Mundra port was the first to be privatized in 1998 under a 30-year concession—long before privatization became mainstream. In 2020, the government amended the Essential Commodities Act to deregulate food storage, directly benefiting Adani’s agri-logistics business. Similarly, Reliance’s Jio received spectrum in 2016 without upfront payment, a move the Telecom Regulatory Authority of India (TRAI) later justified as "promoting competition." Critics, including economist Arvind Subramanian, argue that such policies create "an uneven playing field where incumbents with political access outpace competitors."
Second, regulatory leniency. The Securities and Exchange Board of India (SEBI) took over a decade to investigate allegations of Adani’s offshore shell companies, despite whistleblower complaints in 2014. When the Supreme Court-appointed committee reviewed SEBI’s probe, it noted "gaps in the regulator’s ability to detect market abuse." For Reliance, the government has repeatedly extended deadlines for spectrum payments—most recently in 2022, when telecom operators were given a four-year moratorium. While the government calls this "industry support," opponents see it as proof of regulatory capture.
Finally, the revolving door. Gautam Adani’s son, Karan, was appointed to the board of the Gujarat Maritime Board in 2018, a body that oversees port policies. Reliance’s Mukesh Ambani has been a member of the Prime Minister’s Council on Trade and Industry since 2000, advising on economic policy. Former bureaucrats routinely join these conglomerates post-retirement: the former chairman of the Airports Authority of India now heads Adani Airports, and a former TRAI chief is a Reliance advisor. Proponents of this view, like journalist Paranjoy Guha Thakurta, argue that such proximity blurs the line between public interest and private gain.
The underlying fear isn’t just about wealth—it’s about democracy. If a handful of firms control critical infrastructure, from ports to data, do they also shape the rules governing them? And if so, what happens to the small businesses, farmers, and startups left outside the charmed circle?
THE ARGUMENT AGAINST The counterargument is that Adani and Ambani’s rise reflects India’s economic evolution, not state favoritism—and that their scale is necessary for India’s global ambitions.
First, their growth mirrors India’s infrastructure needs. Adani’s ports and power plants fill gaps left by underinvested public utilities. When the government privatized airports, Adani won bids for six major ones not because of political connections, but because it offered the highest revenue share to the exchequer—46% for Mumbai, compared to 36% by the next bidder. Similarly, Reliance’s Jio invested ₹3.5 lakh crore in 4G infrastructure when global telecom giants like Vodafone were exiting India. Without such capital, India’s digital revolution would have stalled.
Second, regulatory scrutiny exists—but it’s often misrepresented. SEBI’s 2023 report on Adani found no evidence of price manipulation, though it flagged "related-party transactions" as a concern. The Supreme Court committee also noted that while Adani’s debt levels were high, they were "not unusual for infrastructure firms globally." For Reliance, the spectrum payment extensions were part of a broader relief package for all telecom operators, not a targeted bailout. The government’s argument is that supporting telecom ensures affordable internet access for 1.4 billion Indians—a public good.
Third, the revolving door is overstated. India’s corporate history is littered with firms that thrived under one government and collapsed under another—think of the Tatas under UPA or the Birlas under NDA. If proximity to power were the sole determinant of success, why did Anil Ambani’s empire crumble despite his brother’s influence? The real driver, defenders argue, is execution. Adani’s Mundra port became profitable only after a decade of losses, and Jio’s 4G rollout required relentless innovation, not just regulatory favors.
Finally, the alternative to concentrated capital is worse. India’s public sector banks are saddled with bad loans, and state-owned enterprises like Air India and BSNL have failed to deliver. Private capital, even if imperfect, is the only force capable of building the infrastructure India needs to compete with China. As economist Surjit Bhalla puts it, "The question isn’t whether Adani and Ambani are too big—it’s whether India can afford to be small."
The real debate, then, isn’t about cronyism—it’s about whether India’s growth model should prioritize scale or equity. And if scale is the answer, how do we ensure it doesn’t come at the cost of competition?
THE HIDDEN DIMENSION Most discussions about Adani and Ambani’s proximity to power ignore a critical factor: India’s infrastructure deficit. The country needs $1.4 trillion in infrastructure investment by 2025, but its public sector is broke. The fiscal deficit hovers around 6% of GDP, and state governments are drowning in debt. Private capital isn’t just an option—it’s the only game in town.
This reality shapes the debate in two ways. First, it forces the government to court large conglomerates, because only they can mobilize the capital required for mega-projects. When the UPA government launched the National Highways Development Project in 2000, it relied on private players like IRB Infrastructure and L&T. The NDA’s Bharatmala Pariyojana is no different—Adani and Reliance are natural bidders because they have the balance sheets to absorb risk.
Second, it creates a moral hazard. When the government depends on a few firms to deliver critical infrastructure, it becomes reluctant to enforce strict regulations. The 2015 coal block auctions, for instance, were designed to end cronyism, but they also led to a 40% drop in coal production because smaller players couldn’t meet the financial guarantees. The lesson? In a capital-scarce economy, scale wins—but at the cost of competition.
The hidden dimension, then, isn’t just about politics. It’s about India’s structural constraints. The question isn’t whether Adani and Ambani are too close to power—it’s whether India can afford to have them anywhere else.
WHERE INDIANS STAND There’s no comprehensive national survey on this specific question, but a 2023 India Today Mood of the Nation poll found that 42% of respondents believed "big business houses have too much influence over government policies," while 35% disagreed. The divide was stark along partisan lines: 60% of Congress voters agreed with the statement, compared to 28% of BJP voters. A 2022 Lokniti-CSDS survey also found that 58% of urban Indians believed "corporate houses get undue benefits from the government," though rural respondents were less likely to agree.
YOUR VIEW If India’s infrastructure needs can only be met by a handful of conglomerates, does that make them indispensable—or dangerous? And if they’re both, how do you balance the two?
This newsletter aims to clarify genuine arguments on complex issues. It does not endorse any political position or party.