Doing Big Business In Modis Gujarat When his son was married in the coastal state of Goa last year, Indian billionaire Gautam Adani’s guest list included the richest man in the country and many a chief executive and top banker and bureaucrat. Most, however, just stopped by the night before to bless the happy couple and skipped the actual wedding. But one prominent friend stayed through all the ceremonies over a couple of days, genial and relaxed like a favorite uncle. It was Narendra Modi, chief minister of Adani’s home state of Gujarat. Ranked No. 609 in the world with an estimated worth of $2.8 billion, Adani runs India’s largest port, a power company and a commodities trading business. A large chunk of his business is located in Gujarat, and the government under Modi, who has been running the state since 2001 and now is the favored prime ministerial candidate in the national elections this spring, has been more generous to Adani than to any other industrialist there. Adani has, over the years, leased 7,350 hectares–much of which he got from 2005 onward–from the government in an area called Mundra in the Gulf of Kutch in Gujarat. FORBES ASIA has copies of the agreements that show he got the 30-year, renewable leases for as little as one U.S. cent a square meter (the rate maxed out at 45 cents a square meter). He in turn has sublet this land to other companies, including state-owned Indian Oil Co., for as much as $11 a square meter. Between 2005 and 2007 at least 1,200 hectares of grazing land was taken away from villagers. India’s most alluring GDP growth story looks different if you’re Gautam Adani or a villager living off the land. India’s most alluring GDP growth story looks different if you’re Gautam Adani or a villager living off the land. (Photo: Joe Athialy) Subscribe to Forbes Asia Current Issue Inside the Magazine Subscribe to Forbes Asia Your Beautiful Indian Rug Was Probably Made By Child Labor Megha Bahree Megha Bahree Contributor Will Infosys Co-Founder Nandan Nilekanis Likely Plunge Into Politics Help The Congress? Megha Bahree Megha Bahree Contributor Indian Minister Lashes Out At Goldman Sachs Megha Bahree Megha Bahree Contributor Under Indian law land meant for grazing cattle can be used for something else only if it’s in excess. There’s a formula applied to calculate. Even then the village chief has to give permission to take the land. Villagers in Adani’s SEZ say their grazing land was signed away by earlier village chiefs without their knowledge. They have filed multiple cases in the Gujarat High Court to contest the government’s actions, going back to 2005 and even earlier. Several cases are still pending. On that cheap land Adani has built his cash cow–the country’s largest private port by volume–as well as a 4,620-megawatt coal-fired power plant. Anand Yagnik, a lawyer representing some of the Mundra villagers, says, “The basic philosophy of a liberal economy is to allow market forces to play its role. Then why do you have to allocate scarce resources to industrial houses at throwaway prices when they have sufficient capital to pay market rates?” Modi, it should be noted, is posed as the candidate of Indian economic revival in the national race on the basis of his Gujarat record. In February he gave a speech touting the benefits of more open business competition in India. On the surface the busy Adani port exemplifies such commerce. On an earlier February day two tugboats were guiding a loaded ship toward the jetty even as another ship was being loaded with containers. In one section of docks, new Maruti Suzuki cars were being cleaned for shipment. In another, commodities excavated from the region–bauxite, bentonite, iron ore–lay in individual piles, waiting to be loaded for export. In the most recent available data, Gujarat’s GDP shows a compounded average growth of 13.4% during Modi’s tenure, outstripping the national rate of 7.8% for the period. Thanks to Modi’s policies it has attracted investment in sectors like auto manufacturing and solar power. It has made advances in rainwater harvesting and irrigation, and offers a near 24-hour electricity supply statewide. (In contrast, the country has averaged a power deficit of up to 9% for the past three years, though that has improved much of late.) Miles of smooth roads, occasionally lined with pink, orange and white bougainvillea and kept clean by sweeping machines, let you zip around the massive city within a city that is Adani’s special economic zone. The idea is to have export-focused companies set up their factories in the SEZ, close to the Adani port. As additional incentives the billionaire has built a 40-mile railway line, linking the port to the national railway network, as well as a 1.1-mile-long private airstrip that SEZ tenants can use for their chartered flights. So far 23 companies have signed up. Thus Gujarat has gained some output and employment, but Adani has captured the rents. The Adani Group was established in 1988 and became publicly traded in 1994. But its real rise happened under Modi’s reign in Gujarat. From 2002 to last March the group’s revenue rose from $765 million to $8.8 billion while net profits climbed even faster. During this period it constructed its SEZ, bought mines in Indonesia and Australia to ensure it had a steady supply of coal for its thermal power plants in India and launched Asia’s largest coal import terminal in Mundra. In 2011 it further expanded in Australia, buying for $2 billion Abbot Point, a coal terminal in Queensland. It also tacked on a hefty amount of debt–$13 billion–more than doubling since 2011. While none of the other companies in Kutch, or the rest of Gujarat for that matter, have received the kind of largesse on land rates as Adani, they, too, have benefitted from the Modi government’s bent. It is one that, whatever Modi may now be saying on the campaign trail against crony capitalism and on behalf of the downtrodden, is even less mindful of environmental damage and villager prerogatives than are Indian land-use practices in general. At a political rally in distant Lucknow in early March, Modi said farmers were his friends and he would stand by them. He also said he would “not allow anyone to loot the exchequer.” But spend time around the villages of Kutch and a vastly different picture appears. This region was famous for its crops of sapodilla, a brown, fleshy fruit slightly smaller than a tennis ball, as well as dates, coconuts and castor. Area farmers say that that’s no longer the case. (Official stats seem to end in 2006.) Fly ash and saline water from Adani Power and a nearby Tata Power Co. Ltd. plant are spoiling the crops and making the soil less fertile, they say. For miles at a stretch the chimneys of the two power plants are visible against the horizon. Gajendra Sinh Jadeja, the 28-year-old head of Navinal village, says the Gujarat government took some 930,770 square meters of his village’s grazing land for Adani’s SEZ. Adani got it for 19 cents a square meter. Traversing a couple of nearby barren fields, Jadeja says he had been growing alternately cotton, millet and castor there. Now patches of white salt are easily visible across stretches of the fields and have become a common sight across farms. “The saline water ruined the soil, and the poor production now is just not worth it,” he says. here is the link to read more forbes/sites/meghabahree/2014/03/12/doing-big-business-in-modis-gujarat/
Posted on: Mon, 24 Mar 2014 09:47:50 +0000