India Finance
Hindenburg fallout generates rare unity amongst Indian opposition parties
Apr 27, 2023
Rahul Gandhi's disqualification from Parliament (he says because of questioning the PM about Adani links) has generated unity amongst opposition figures. Image Wikimedia Commons

Three months after the release of the explosive Hindenburg report on the Adani group, the issue continues to galvanise India’s political opposition. The recent session of Parliament was dominated by opposition calls for an investigation of the Hindenburg allegations by Parliament. Rahul Gandhi of the Congress party has effectively been elevated to the position of the leading Opposition politician following his repeated questioning of Prime Minister Modi about his close ties to the Adani Group. Gandhi’s disqualification from Parliament, a move apparently engineered by the ruling party, has accentuated his prominence.  In part 1 of this analysis of the fallout from the Hindenburg report, AdaniWatch rounds up recent political developments. In part 2, we will look at the business side of things.

The past 12 weeks are probably the hardest the Adani Group’s legal and PR teams have ever had to grapple with. Since the release of a damning report by US-based Hindenburg Research on 24 January, which accused the group of ‘pulling the largest con in corporate history’, there have been fires to put out almost on a daily basis with scandal after scandal emerging and no end in sight. The international media have stepped up scrutiny of the group’s affairs, shining a light on alleged malpractices. The dramatic fall in the Group’s value has squeezed its finances.

In addition, the Adani issue continues to dominate the political agenda in India, overshadowing a recent wave of small-scale inter-religious violence between Hindus and Muslims in various parts of the country, and even a significant state election in the southern state of Karnataka which is due to take place in May 2023.

100 questions to the Modi government over the Hindenburg allegations by the Congress party.

The second half of the Parliament’s budget session, from 13 March to 6 April, was frequently disrupted by vehement opposition demands for a joint parliamentary committee to conduct a thorough investigation of allegations against the Adani Group. The disqualification of Congress leader Rahul Gandhi prompted even more protests. According to PRS Legislative Research, a Delhi-based think tank, the lower and upper houses of Parliament were able to function for less than 6% of their scheduled time in this session due to the furore generated by these issues.

Rahul Gandhi disqualified from Parliament

On 24 March 2023, Congress leader Rahul Gandhi's membership of India’s Parliament was cancelled. This followed his conviction and sentencing by a court in Gujarat in a defamation case. Any MP sentenced to a prison sentence of two years or more can be expelled from Parliament.

The charges against Gandhi relate to remarks he made in an election rally in 2019. Speaking in Karnataka in a speech in the run-up to the 2019 general election, Gandhi asked ‘why do all the thieves, be it Nirav Modi, Lalit Modi or Narendra Modi, have ‘Modi’ in their name?’.

Lalit Modi (a former cricket administrator who conceived the Indian Premier League, now the world’s second most valued sporting competition) and Nirav Modi (a diamantaire and jeweller) are Indian billionaires who are considered fugitives from the law, having been declared defaulters by various banks and then fleeing India to escape criminal prosecution. This remark led to a criminal defamation case being filed against Gandhi by Purnesh Modi, a Gujarat politician and elected member of the state’s legislative assembly belonging to the BJP, alleging that the remarks had defamed all those with the Modi surname. (None of these four Modis – Narendra, Purnesh, Lalit and Nirav – are related.)

The lawsuit, filed in 2019, had been put on hold in 2022, after the complainant asked the court to halt proceedings on the ground of lack of sufficient evidence. However, after Gandhi’s attacks on Narendra Modi in Parliament, the case was revived and the trial concluded with an alacrity rarely seen in Indian courts. Following the verdict on 23 March, the Parliament moved even faster, expelling Gandhi the very next day, despite the law specifying that a convicted MP is to be disqualified three months after the conviction, with that time being allowed for them to appeal. Three days later, on 27 March, Gandhi was asked to vacate his government-allocated residence in Delhi.

The move was widely condemned in India and abroad. It is perceived to be retaliation for Gandhi’s fiery speech in Parliament on 7 February that squarely targeted Prime Minister Narendra Modi for his close relationship to Adani Group chairman Gautam Adani. Gandhi himself made the same claim.

‘Please understand I am disqualified because the PM is scared of my next speech on Adani,’ Gandhi said at a media conference. ‘They don’t want me to deliver it in Parliament. But I won’t be silenced. The truth will be heard.’

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A catalyst for opposition unity

Significantly, the move unified most of India’s main opposition parties in condemnation. Chief ministers of Indian states and other party leaders spoke with one voice to say that it was a black day for democracy.

Outrage came from chief ministers such as West Bengal’s Mamata Banerjee (of the Trinamool Congress), Tamil Nadu’s M K Stalin (of the Dravida Munnetra Kazhagham), Telangana’s K Chandrashekhar Rao (of the Bharat Rashtra Samiti), Jharkhand’s Hemant Soren (of the Jharkhand Mukti Morcha), Delhi’s Arvind Kejriwal (of the Aam Aadmi Party), Kerala’s Pinarayi Vijayan (of the Communist Party of India (Marxist)), Bihar’s Tej Pratap Yadav (a minister in the Bihar government from the Rashtriya Janata Dal), Rajasthan’s Ashok Gehlot (Congress) and Chhattisgarh’s Bhupesh Baghel (Congress).

Similarly, leaders of opposition parties in BJP-ruled states condemned the move. These included Uttar Pradesh’s Akhilesh Yadav (of the Samajwadi Party), Maharashtra’s Uddhav Thackeray (of the Shiv Sena UBT faction) and Sharad Pawar (of the Nationalist Congress Party). Bihar Chief Minister Nitish Kumar, of the Janata Dal (United) (which runs a coalition government with the Congress and the Rashtriya Janata Dal) personally declined to comment, but other members of his party joined the chorus of indignation.

Significantly, several of these politicians – Banerjee, Kejriwal, Vijayan and Rao – are rivals to the Congress in their respective states. Banerjee and Kejriwal, in particular, have been reticent to align themselves with the Congress on many issues as both harbour national ambitions and consider their parties potential competitors with the Congress for the position of principal opposition to the BJP.

Even on the Adani issue, these opposition parties were not all on the same page. Banerjee’s Trinamool Congress and Pawar’s Nationalist Congress Party have both stayed away from the demand for a joint parliamentary committee to inquire into the allegations against the Adani Group. Both parties have argued that a such a committee cannot conduct an unbiased investigation as it will be led by a BJP MP and will have a majority of BJP members, and that they trust a committee appointed by the Supreme Court investigate the issue impartially instead.

Across the spectrum of Indian opposition parties there were only three significant hold-outs. Choosing not to comment on Gandhi’s disqualification are Odisha Chief Minister Naveen Patnaik and members of his Biju Janata Dal; Andhra Pradesh Chief Minister Jagan Reddy (of the YSR Congress); and Andhra Pradesh opposition leader Chandrababu Naidu (of the Telugu Desam Party).

Only once before in Indian history have the principal opposition leaders at the national level been jailed. Between 1975 and 1977, Prime Minister Indira Gandhi (Rahul’s grandmother) declared a national emergency. She suspended civil liberties, had most of her political opponents arrested, dismissed opposition state governments, censored the press, and declined to hold elections. That period is widely regarded as a suspension of democracy in India in which Indira Gandhi was effectively a dictator for 21 months.

The imposition of a jail sentence on Rahul Gandhi (the sentence has been suspended and he is out on bail until 30 April while his appeal is heard) has raised the spectre of a new, undeclared ‘emergency’ under the Modi regime.

The virtual closing of opposition ranks around Gandhi is a significant signal with less than a year before the general election of May 2024. Since before the 2019 general election, which Modi’s BJP won in a landslide, India’s opposition parties have been unable to come to an agreement on a united alliance to challenge the BJP. The principal stumbling block has been over the balance of power within such a formation between the Congress, on the one hand, and the regional parties which are dominant in different states, on the other. Politicians such as Banerjee, Pawar, Kumar and Kejriwal, who enjoy national prominence despite their parties being significant only in one or two states, often complain of ‘bullying’ by Congress.

The BJP’s singling out of Rahul Gandhi, however, for disproportionately harsh treatment seems to have propelled him to a position of strength amongst the Indian opposition parties. And the trigger for the BJP’s over-reaction appears to have been Gandhi’s hardline stance on the Modi-Adani nexus.

Modi's BJP ducking for cover

Meanwhile, the government has been using the Supreme Court’s establishment of a committee of inquiry into some of the Hindenburg allegations to avoid facing the Adani issue head on. While BJP members, supporters and some of its elected representatives have been vociferous in their support for the Adani Group, its members in government have been more circumspect.

While the Prime Minister has avoided talking about the subject altogether, two of his most senior government ministers have addressed it to some extent.

On 13 March 2023, Finance Minister Nirmala Sitharaman responded to questions in Parliament on the exposure to Adani’s financial woes of the Life Insurance Corporation. In a written reply, she said ‘the Life Insurance Corporation of India (LIC) has informed that its debt exposure to Adani Group of Companies, was ₹6347.32 crore [US $770 million] and ₹6,182.64 crore [US $750 million], as on December 31, 2022, and March 5, 2023, respectively’. Her reply also said that five public-sector insurance companies have informed her that they do not have loan or credit exposure to the Adani Group of companies.

Outside Parliament, Sitharaman is the only government minister who has attempted to address the substance of the Hindenburg allegations. At a BJP press conference on 6 April, while repeating the government’s line that Rahul Gandhi’s allegation that Modi has favoured Adani is ‘baseless’, she categorically asserted that ‘it is not true [that]… Adani has been given undue favours.’ She made counter claims that the Adani group had been given favourable treatment by Congress governments as well. She pointed to a solar power project in Rajasthan and a port project in Kerala that had been awarded to Adani Group companies by Congress governments.

Home Minister Amit Shah, who is seen as the most powerful figure in the government and the BJP after Modi, was quoted as saying ‘the Supreme Court has taken cognizance of the [Adani] matter. As a minister, if the Supreme Court is seized of the matter, it is not right for me to comment. But in this, there is nothing for the BJP to hide and nothing to be afraid of.’

Story continues in Part 2