The electoral setback suffered by India’s Prime Minister Narendra Modi on June 4 has led to another, at a cost of billions of dollars. The mixed results of the ruling party, the Indian People’s Party (BJP, for Bharatiya Janata Party), which, with a minority of 240 MPs out of a total of 543, must govern within a coalition, sent Adani conglomerate companies plunging on the stock market. Nearly $45 billion (€41.9 billion) in valuation went up in smoke in a single day.

Gautam Adani, founder of the group of the same name, is known for his closeness to the nationalist and autocratic power of Modi, who, like him, hails from Gujarat in the west of the country. His group, which operates in infrastructure, energy, defense, aerospace and mining, largely depends on public contracts and concessions. When Modi became chief minister of the state of Gujarat in 2001, Adani’s fortune was valued at $70 million. It jumped to $7 billion when Modi became prime minister in 2014. Since then, the businessman has risen to become one of Asia’s wealthiest, with a fortune valued at $140 billion.

Its plummeting stock market rating underlines the vulnerability of India’s so-called “crony capitalism.” When a company depends on favors from a leader, the slightest electoral setback causes it to collapse like a house of cards. State protection also provides a degree of impunity, which increases the risk – and suspicion – of fraud. The Securities and Exchange Board of India is investigating possible accounting manipulation and fraud that artificially inflated the Adani Group’s valuation, as highlighted by the American hedge fund Hindenburg Research, in a report published in 2023.

Debt doubled in five years

The Financial Times newspaper revealed, in an investigation published in May, that the Indian group had defrauded a public electricity company in southern India by supplying it with coal of poorer quality than that which it had sold it. This fraud is said to have earned the company several hundred million dollars. Adani denies all these accusations. Despite these weaknesses, the group continues to be courted. The oil company TotalEnergies has forged several partnerships with Adani, and above all, the banks have lent it colossal sums, doubling its debt over the past five years.

As Modi’s victory could bring in big bucks for investors, they have no interest in seeing him lose power. Between 2019 and 2024, donations to the BJP totaled $730 million, including nearly $100 million from companies facing tax adjustments, compared with $171 million to its main rival, the Congress Party.

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