Wednesday, February 1, 2023

Adani’s political fallout

The controversy surrounding the Indian conglomerate Adani Group is filtering through to politics.

Indian billionaire Gautam Adani likens his conglomerate's accounting travails to an attack on the country, creating a political element as concern rises about the outlook for a business empire that owns some of India's key infrastructure and employs thousands.

While Prime Minister Narendra Modi and his ruling party have largely been muted so far on the Adani woes, he likely has a keen interest in how it all plays out.

The tycoon knows Modi well. Both hail from the western state of Gujarat and Adani defended Modi in the aftermath of the deadly religious riots there in 2002 when he was chief minister.

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It's no surprise that the troubles at Adani — allegations of stock manipulation and accounting fraud from New York-based investor Hindenburg Research, which the group denies, and the subsequent plunges in shares of its companies — are filtering through to politics.

Adani is a big deal in India — the country's largest port operator and manager of some of the country's biggest airports. While his wealth is light years away from the reality for many ordinary Indians, Gautam Adani's story of self-made success resonates.

For now, the upsides to Modi maintaining his connections with Adani probably outweigh the risks.

Opposition parties are playing up their ties and suggesting the business may get state support as it comes under growing financial pressure. While loud, however, the opposition is fragmented and has struggled for years to get things to stick to Modi personally.

Adani calls the claims against it "a calculated attack on India, the independence, integrity and quality of Indian institutions, and the growth story and ambition of India."

Modi is well aware of Adani's role as a national prize, an Indian company with global reach that can be painted as too important to the economy to fail. Especially as the prime minister focuses on wooing voters ahead of elections due around mid-2024, for whom jobs are a paramount consideration.

Today's India budget spelled out that calculus, unleashing a 33% jump in capital spending on infrastructure. That's designed to build the roads and ports that attract investment and factories and, above all, create jobs. 

Adani and Modi at the Fifth Vibrant Gujarat Global Summit in 2011. Photographer: Vijay Soneji/Mint/Getty Images

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Global Headlines

Stay home | The UK is experiencing what's expected to be its most severe day of strikes for more than a decade today as industrial action closes schools and cripples Britain's rail network, forcing office workers to stay home. As many as 475,000 union members are protesting to demand pay rises that do more to combat the country's cost-of-living crisis.

  • Strikes that hit the UK economy in the final quarter of last year shaved about 0.2% off economic output, according to Bloomberg Economics, putting the cost of the action at $1.9 billion.

Debt debate | US House Republicans will meet today to consider their strategy on the debt ceiling, hours before Speaker Kevin McCarthy and President Joe Biden discuss the issue. Biden plans to ask McCarthy for his proposal on budget cuts and other demands Republicans are seeking in exchange for raising the limit and averting a market-rattling default.

Surging military production is helping keep Russian industry going strong, offsetting much of the damage done by international sanctions and other fallout from President Vladimir Putin's invasion of Ukraine.

Weapons boost | The US will supply Ukraine with longer-range artillery and ammunition as part of a new $2 billion package of assistance, a source says, but it won't include advanced weapons like long-range missiles. It's being finalized as Ukraine prepares for a potential new Russian offensive and tries not only to hold recaptured territory but to seize fresh advantages on the battlefield.

  • The US, the UK and Germany have so far said they won't send fighter jets to Ukraine, denying a key request from President Volodymyr Zelenskiy.
  • Ukrainian security officials searched the home of billionaire Igor Kolomoisky, Ukrainska Pravda reports, citing unidentified sources in law enforcement.

Best of Bloomberg Opinion

Mending ties | Before an expected visit by US Secretary of State Antony Blinken, the Chinese Communist Party's flagship newspaper said Beijing and Washington must find common ground for the sake of the global economic recovery. The US hasn't "let go of its obsession with treating China as a so-called strategic competitor," the People's Daily wrote, adding that "blind anti-China approaches will not work."

  • Conflict in the Indo-Pacific region would be "catastrophic," Australian Foreign Minister Penny Wong warned in a speech before joining the country's defense minister in talks with their British counterparts.

Explainers you can use 

Less cash | Donald Trump has raised less than $10 million since he launched his US presidential reelection campaign. The disappointing haul underscores the stunning reversal in donor sentiment toward the former president's comeback bid, as even Republicans who like him and his policies increasingly look for an alternative like Florida Governor Ron DeSantis, who's widely expected to enter the race.

  • Nikki Haley, a former South Carolina governor and Trump's ambassador to the United Nations, plans to announce she's running, becoming the first Republican to officially challenge her former boss.

Bloomberg TV and Radio air Balance of Power with David Westin on weekdays from 12 to 1pm ET, with a second hour on Bloomberg Radio from 1 to 2pm ET. You can watch and listen on Bloomberg channels and online here.

News to Note 

  • The US and India plan to share advanced defense and computing technology, including the potential joint production of jet engines, as the Biden administration seeks to shift New Delhi away from Russia and counter China.
  • Brazil's former president Jair Bolsonaro told supporters at a meeting in Florida that he intends to remain active in his country's politics.
  • The US is on track to telegraph support for a scaled-back drilling plan at ConocoPhillips's proposed Willow oil project in Alaska, over the objections of environmentalists.
  • Iran said a foreign security service that it didn't identify and Kurdish groups were behind a drone attack on an Iranian ammunition depot that has escalated Middle East tensions.
  • The US, Canada, the UK and Australia imposed fresh sanctions on Myanmar, adding to pressure on the military regime two years after it overthrew the civilian government.

And finally ... Russian troops will help three African nations secure a gold-rich region in the Central African Republic rife with armed rebel groups, the latest sign of Moscow's expanding influence on the continent even as the US and its allies push against the Kremlin's footprint. A deal struck between the CAR, Chad and Sudan aims to remove groups operating along the mineral-rich borders with the two neighboring states.

A woman sieves through mud to find gold at the Gam mine in the CAR.  Photographer: Issouf Sanogo/AFP/Getty Images

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