Deepanshu Mohan 
Amidst the latest allegations made in Hindenburg’s research, a lot of unanswered questions require pressing details and explanation from SEBI, its chairperson, its board of directors and other stakeholders involved.
What is critical to note is how, to date, SEBI or the Narendra Modi government has not opened-up any serious investigation into the Hindenburg charges on Adani firms with the collaboration of US Securities and Exchange Commission as should be normally done in such a serious matter.
A pursued ‘silence’ by an ‘independent’ market regulator, despite the damning allegations disseminated in Hindenburg’s previous report, require critical scrutiny and has broader implications on the credibility of the regulator of one of the largest emerging markets.
It is difficult to gauge why, for credibility reasons as well, the SEBI chairperson has not resigned yet, as an open investigation into her and her husband’s investments in Adani offshore funds are more carefully scrutinised.
If there is evidence of their investments into Adani-linked offshore firms and there is no specific denial yet from those charged by Hindenburg, it would have been normal (and ethical) for the SEBI chairperson to also recuse herself from any SEBI investigations into Adani firms.
That did not happen. As more time passes by, for market-stability reasons, there is also a clear case for the Supreme Court to perhaps look into this matter suo motu once again.
Regulatory implications of a government-big private capital nexus
Back in February 2023, this author had argued the nature of oligarchic capitalism and crony nexus seen in Modi’s term where a pro-big business outlook to policy and government action allowed conglomerates like Adani to maximise their business reach and profitability across sectors.
India’s pro-business economic outlook has problematised the relationship between the Indian state and big private capital, which has similar traits in pattern with the Latin America of the 1980s and Russia’s oligarchic state of the 1990s (and since).
Ad hoc favouritism and pro-business policies allowed a few companies to monopolise asset ownership, while practicing rent-seeking behaviour – adding wealth without adding significantly to productivity.
This has been observed in the rise of a few family-controlled conglomerates dominating the business scene in an opaque manner, with an explicit support of the state, as market competition across sectors and between firms (with the rise of big business) has narrowed. This has also questioned the form, nature and resilience of India’s corporate governance and regulatory structure.
The latest allegations in Hindenburg’s research cast a deeper shadow of doubt on this structure.
It must also be acknowledged how Hindenburg, as an activist short-seller, makes its own money from ‘shorting’ on overvalued stocks.
Scandalous allegations, if not proven, will undermine its own credibility, though, there has been less evidence made available so far that could challenge the findings of its research – from 18 months back or now.
India’s political opposition, strengthened by the recent Lok Sabha electoral performance, needs to ensure there is enough political pressure now on the Modi government to seriously pursue the charges levied against the SEBI chairperson and the nature of their involvement in the Adani episode.
Modi’s own political rise has been shaped by the strengthening of the state-capital-private business alliance, in pursuit of big-infra, often brought at the cost of social and economic protection to India’s deeply fragmented labour force.
The Adani-Modi alliance, shares a similar dynamic from the “Gujarat growth model” days.
Driving an over-leveraged national infrastructural development in a monopolistic fashion, while owning disinvested public assets, Adani has classically personified the oligarchic linkages and rentier profits generated by a licensing system for big-infra on which Modi government’s leaky growth model has heavily relied.
It also speaks of excesses in private asset ownership, a too-big-to-fail syndrome, with a little space for regulatory or government action (even in cases where there is proof of conflict of interest).
There are also issues of public exposure and vulnerability attached with the way in which some state-owned banks and insurance companies have lent money out to the cronies. This has been particularly true of the infrastructure sectors even before NDA came to power. It has been further exacerbated in recent years.
At the bottom of all this, a structural crisis and a deeper rot in India’s corporate governance and regulatory system has allowed the scale of nexus between the state-big private capital to worsen. Allowing a few family-controlled conglomerates with connections to ruling party and a given leader, allows them to carry their business with impunity, ‘owning’ and ‘disregarding’ regulatory scrutiny and institutional due process.
Deepanshu Mohan is associate professor and Director, Centre for New Economics Studies, Jindal School of Liberal Arts and Humanities, OP Jindal Global University.