Lest the Economy be Ruined

  • Prof. Gourav Vallabh

Modi ji & Company goes by a unique ‘mantra’ of ‘Borrow & Conquer’. Many of us sometimes think of doing business but the biggest obstacle that we face is one of ‘capital’, because we hail from families with middle incomes or low incomes. In this incapacity, we are not able to start that business despite having a good idea to start it. But Modi ji has a mantra, exclusively for his friends. A scheme that is not meant for 140 crore countrymen but only for 2-3 people ‘Borrow and move on’. Make business on credit, become the richest man in Asia; not with your own money, but with credit.

Earlier, when I saw a figure of the Government of India’s borrowings in the budget of the Government of India, it seemed erroneous, but that wasn’t the case.

In 2014, the government of India’s borrowings stood at Rs. 55.9 lakh crores and in 2023, the government has written in the budget that in the financial year 2023, the borrowings will increase from 55.9 lakh crore to 152.17 lakh crores, i.e., in the year 2013-14, the debt per Indian which was at Rs. 43,124, will increase to Rs. 1,09,000 in the financial year 2023. That clearly means that in the last 8 years due to mismanagement of Modi ji, the debt per Indian has increased by 152 percent.

43,124 to 1,09,000 rupees, such a huge debt is upon us. This debt has increased by 152 percent. This is the model of the government. New York’s credit research firm, Credit Site has published a research report about it, according to which the number-1 person idealizing ‘Hum do, Hamaare Do’ of the government, has a debt of Rs. 2,30,000 crores. The total debt on the Adani Group is Rs. 2,30,000 crores. Now the question arises as to who is making such huge loans available to Adani Group? I have also brought the details of how much debt is accrued to Adani for State Bank and how much for other private and foreign banks. So, according to credit site, credit research firm, the gross debt on Adani Group is of 2.3 trillion which accounts for Rs. 2,30,000 crores. What this report says further is astonishing - the Adani Group is highly leveraged. It means that he is deep-neck in debt, yet new loans are being issued to him. That report further says that Adani Group should not be venturing into new and unrelated businesses. This is a big risk in India. Everyone in the country including me is fully aware of why is Adani still doing so!

This report says that Adani Group is not investing capital out of its own pocket, this is not our data, we are not saying that Adani Group is in debt, this report is saying that Adani Group is doing unrelated business, of which he has no experience. This report says that Adani is not injecting its private equity capital into its groups. Further, this report says and by quoting this report, I am making a comprehensive point that between 2020 and 2022, within one and a half years, Adani Group took a loan of 48 thousand crore rupees. State Bank of India gave single-handedly a loan of Rs. 18,770 crores to Adani. Reports say that the Adani Group is sinking into debt and investing in areas it is most inexperienced in. Reports also say that the group needs to infuse its own capital in the business and during the same period, State Bank gave a loan of Rs. 18,770 crores to the Adani Group between 2020 and 2022.That is, 40 percent of the loan taken by Adani Group between 2020 and 2022, was provided by the State Bank of India alone and the rest 60 percent was provided by 14 Global Private Banks of the world, including Bank of Japan, Bank of America, Bank of Singapore, banks of Australia, banks of Switzerland together. It is not over yet as this report further says that due to this loan, there is a huge risk looming over the Indian banks. According to the report, Adani Enterprises and Adani Green Energy, which have a under debt of Rs. 94,400 crores, if their tax before earnings is one and a half times of the interest. So how will they repay their debt?

This report further says that in the coming time, there will be no profit in their new business. When there is no profit, either the banks will have to give them more loans or the debts would turn into bad debts for the banks, because the Adani Group keeps investing in new types of businesses. In the last sentence of this report, it is said that the Adani Group has fallen into a massive debt trap. It is also written in this report that Gautam Adani has good relations with the ruling Modi administration and the relationship between Mr. Adani and the Indian Prime Minister Shri Narendra Modi have been strong since the times when Shri Modi was the Chief Minister of Gujarat.

It is to be noted that the President of Sri Lanka was pressurized by Modi ji to hand over the renewable energy power project to the Adani Group. This information was given by the Chairman of the State and Ceylon Electricity Board of Sri Lanka. Later, he was pressurized to withdraw the statement and he had to mince his words.

It is worth noting that as soon as Modi ji came to the government in 2014, SBI made a principal agreement to give one-billion-dollars-worth of loan to Adani Group and after constant opposition, SBI terminated that MoU. Then in 2020, SBI again offered a loan of 5 thousand crores to Adani’s commercial coal project in Australia. When the pressure from investors grew, that loan was also stopped. Now no one knows anything about this loan. Now the latest information about the Adani group is that this group has bought 29.19 percent shares in a TV channel because Adani is everywhere, from serials to news, from coal to airplanes, from airport surveillance to ports and he has been making progress for last 8 years with our money, with bank’s money.

Now quoting this media house, I am reporting that without consent, without negotiation, without information or approval of the founder, Adani Group talked about buying 29.19 percent stake in the leading TV news channel and he did not stop there, but he went on to say that he would achieve open offer for another 26 per cent participation. We have three questions to the government regarding this matter-

First, who is the person in the government who has been pressurizing the banks to give loans to the Adani Group, while the debt of this group is continuously increasing. Adani Group is not able to make any investment on its own. This group is investing in new areas day-by-day by taking loans. So, who is the person who forced SBI or other banks to give loan to Adani Group? We want to ask that who is responsible for the danger that India’s economy is facing due to the debt of Rs. 2.2 trillion i.e. Rs. 2,30,000 crores on the Adani Group?

Second, why is the Security and Exchange Board of India (SEBI) and the Finance Ministry silent on this matter when the Adani Group is trying to hostile takeover of a media house? Why aren’t they getting it investigated as to how did this hostile takeover happen? The notifications and circulars of SEBI have been violated in this case. So why is it sitting as a mute spectator?

Thirdly, what preparations have been made by Modi ji and Nirmala Sitharaman ji in the Finance Ministry in case the firm, which is operating in the country with a loan of 2,30,000 crores, becomes insolvent and puts the adverse effect on the country’s economy?

(Based on the press briefing on August 25, 2022)