Written By Gopal Krishna on Thursday, March 20, 2014 | 1:17 AM
(In picture: Gautam Adani Modi and Sushil Kumar Shinde, TOI)
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
Ranked No. 609 in the world with an estimated worth of $2.8 billion, Adaniruns 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.
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
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
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
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.
On another field there is a scraggly growth of castor, no comparison to the tall, lush green field that he remembers.
The village of Zarapara with its 15,000 residents is one of the largest
in the area. When the government gave away some of its grazing land to
the Adani SEZ, at roughly 19 cents a square meter, the villagers filed a
case in the Gujarat High Court, one of several similar cases filed by
residents of other villages. The court in the summer of 2011 ordered the
government and Adani to replace that land for the villagers but nothing
has happened so far.
Zarapara was once famous for its sapodillas. “In season five trucks
filled with [sapodillas] would go every day to the market from this
village,” says Zarapara resident Naran Ghadavi, whose farm is 3 miles
from the Adani power plant. “Now we only produce enough to fill one
Ghadavi, 30, blames the decrease in output on the saline water and the
fly ash from the Adani power plant that has polluted the groundwater
tables and broken the pollination process. Pointing to his white shirt,
the small, wiry man says, “Earlier our clothes used to turn yellow [from
the pollen]. Now when the morning dew drips from the tree leaves, the
ground turns black from the fly ash.”
The villagers’ lawyer Yagnik argues that Modi, by giving away land so
cheaply, is depriving the state treasury of funds. “This kind of
subsidization of scarce resources eats away at the public exchequer, and
that has a direct impact on distributive justice because then the state
doesn’t have enough resources to deal with this inequality,” he says.
After years of receiving complaints of environmental abuse, the federal
environment ministry finally, in 2012, named a panel–known as the Sunita
Narain Committee after the woman chairing the process–to look into
In a report last April Narain’s group confirmed the villagers’
complaints–and fears. It said the Adani SEZ had violated multiple green
rules at different points of its mammoth project–destroying mangroves,
filling creeks and causing land and water degradation by dumping fly
At the power plant thousands of gallons of water sucked in from the sea
through one channel are let out through a pipeline. Once sucked in it’s
kept in a reservoir from where it’s pumped into the turbines to generate
electricity and eventually is pumped back out.
The panel found that the reservoir didn’t have any lining to protect the
groundwater. “The examination by the committee shows that the soil in
the area is permeable and without safeguards it will lead to
contamination. This is a clear violation of the environmental clearance
condition,” its report said. The committee recommended that Adani create
a fund that was either 1% of the entire project cost or $37 million,
whichever was higher. It also said the company should reconstruct both
the channels that are used to take in and send back the water, as well
as repair or construct anew the reservoir with impervious lining at the
bottom and sides.
But almost a year after the recommendations were made the company
appears to have done nothing. Meantime, it has plans to expand its
7,350-hectare SEZ to 18,000 hectares.
In an e-mailed response to questions, a spokeswoman for Adani Group said
it had been allotted government land after following all established
processes and used valuations applicable at the time, ahead of
subsequent improvements. “It will be completely misleading if we compare
the price of the land before development and after development as an
entrepreneur takes risk of investing a large amount to develop this
land, and if the commercial venture fails, the consequences are only to
the developer,” the company said.
Adani Group said salinity ingress was a local phenomenon and that its
power plant used technology to ensure that there was no stray fly ash.
It also refuted the observations of the Sunita Narain committee and said
while any large development would affect the environment, it was
certain that its net impact was positive. Also, all government
requirements were followed in setting up its various projects.
The Modi administration did not reply to repeated interview requests.
In today’s India and elsewhere, it is not unusual for governments to
offer benefits to powerful private interests, especially to attract
investment in remote areas. And as noted, Adani is not the sole
beneficiary of Modi’s blessings.
“But what is unusual–and where the problem arises–is when you set
something up on this scale without competitive bidding,” says Aakar
Patel, a columnist at Indian newspaper Mint and a longtime Gujarat
The social dynamics are much the same at the 4,000-megawatt power plant
of Tata’s wholly owned subsidiary Coastal Gujarat Power, a few miles
down the coastline from the Adani plant. It opened in March 2012 under a
different arrangement, this one a federal initiative to spur big energy
plants. Several of them have been announced, but this one from Tata is
the first to go live. Under the deals, the federal government provides
the operators with the land and all clearances. However, land is a state
subject, so it is the state government–Modi’s in this case–that had
identified and allocated the land.
In Kutch fishermen and their families set up camp on the beach. Tagadi
fishing village is one such camp on the banks of what is now the Tata
plant’s outflow channel. Dawood Umar Jaam, 43, has been fishing in the
area for the past five years. He has seen a 60% drop in his catch in the
last few months and blames it on the plant. As the plant takes in
seawater, it also sucks up fish that are still small, killing them
instantly, says a fishermen’s trade union known as MASS, active in the
area. The plant releases hot water back into the sea, raising
temperatures in the immediate vicinity, killing more fish and changing
Jaam, who has a family of six in Tagadi, takes a loan of maybe $2,000
prior to the fishing season to repair his nets and otherwise get ready.
He would earn enough to pay off the loan and save up to about $750 each
year, he says. Not anymore. He doubts he’ll be able to repay more than
$350. Just before he sets off to fish, he points to the boundary fence
of his makeshift house, constructed on three sides using bamboo sticks.
Those sticks used to be covered with fish put out to dry. Now, only a
quarter of the sticks are covered.
The Tata unit says the outfall channel is specially lined with stones to
extend the surface while the water is being discharged so it can cool.
“The outfall channel, which is [4.5 miles] long, ensures that the
temperature of hot water at the discharge point meets the environmental
stipulations,” the company said in an e-mailed statement.
In addition, it says, it’s teaching Tagadi fishermen better practices
and is distributing nets to enhance the catch and providing clean
Back in his adjoining SEZ, things have gotten legally dicier for Adani
of late. Residents of Navinal Village, including the head Jadeja, filed
in 2011 a petition in the Gujarat High Court after they lost their
grazing land to the SEZ. In January the court declared the SEZ illegal
and ordered the companies that had set up factories in there to stop all
work. Reason: The SEZ had been built without getting an environmental
clearance. Under Indian law a project the size of the SEZ would need one
from the federal environment ministry before it can lay a brick. (This
judgment is pertinent only to the SEZ and not to the port or the Adani
Power plant. The company had applied for–and received–separate
environmental clearances for those, and that lets them operate legally.)
The Supreme Court, India’s highest, has refused to stay the lower
court’s decision, although it said existing tenants in its SEZ could
keep operating. With hundreds of millions of dollars already
invested–albeit in a project now in legal limbo–the question now is if
Adani’s effort has become too big to shut down. The Gujarat High Court
passed the ball on that decision to the federal government, asking if
the project could be granted a belated environmental clearance. New
Delhi in turn asked for a couple of months to ponder that decision.
Now that India’s election has been set to begin Apr. 7, the federal
government is effectively blocked from taking this decision. As a result
the fate of this project will likely be decided by whoever comes into
power next, and that could easily be a government led by Modi.