Adani Indictment: Group Loses Rs 2 Lakh Crore; Key Investor’s Stock Falls 20%

Adani Enterprises, the group’s flagship firm, suffered a 20% drop, while Adani Ports fell 15%. Most other group companies, including Adani Green Energy and Adani Total Gas, also saw declines in the range of 10-20%.

New Delhi: American investment firm GQG Partners, Adani Group’s biggest shareholder in the US, faced a sharp decline in its share price, tumbling as much as 23% on the Australian Securities Exchange on Thursday, November 21. The sell-off came after US federal prosecutors and the Securities and Exchange Commission filed charges against billionaire Gautam Adani and other executives of the Adani Group, alleging involvement in a $250 million bribery scheme. Adani Group has called the charges “baseless” and denied them.

GQG’s stock fell to AUD 1.98, closing the day down 20%, according to a Moneycontrol report.

The charges, filed by the US Attorney’s Office for the Eastern District of New York, allege that between 2020 and 2024, senior executives of a renewable energy company under the Adani Group orchestrated a bribery scheme. The scheme purportedly involved paying government officials to secure profitable solar energy contracts with public entities. A Canadian institutional investor, identified as the issuer’s largest shareholder, was also implicated in the alleged misconduct, according to a CNBC TV18 report.

As a significant investor in Adani Group companies, GQG Partners sought to reassure stakeholders amid growing concerns. The boutique investment firm, led by co-founder Rajiv Jain, stated it is closely monitoring the situation and reviewing its exposure to Adani stocks. GQG emphasised that over 90% of its clients’ assets are invested in companies unrelated to the Adani Group, ensuring a diversified portfolio.

Despite this reassurance, GQG’s ties to the Adani Group have drawn scrutiny. Since March 2023, GQG has increased its investments in Adani companies – including Adani Ports, Adani Green Energy, and Adani Enterprises – starting with a Rs 15,446 crore infusion and growing to nearly Rs 80,000 crore by late 2024. These investments came after allegations of financial irregularities were raised by Hindenburg Research earlier this year.

As of the quarter ending September 30, GQG Partners held stakes ranging from 1.5% to 2% in six Adani Group companies, according to a CNBC TV18 report. “Our team is reviewing the emerging details and determining what, if any, actions for our portfolios are appropriate,” a GQG statement said.

GQG Partners manages $159.4 billion in assets as of October 2024. The Adani Group’s holdings currently have a market capitalisation exceeding $200 billion, according to a Fortune report.

Also read: Adani Indictment: Congress Repeats Call for JPC Probe into ‘PM and His Favourite Businessman’

Shares of Adani Group companies plummeted on Thursday following the charges. At the start of trading, stocks across the group posted losses between 10% and 20%, erasing Rs 2 lakh crore in market capitalisation.

Adani Enterprises, the group’s flagship firm, suffered a 20% drop, while Adani Ports fell 15%. Most other group companies, including Adani Green Energy and Adani Total Gas, also saw declines in the range of 10-20%. In response to the developments, Adani Green Energy announced it has canceled a planned US dollar-denominated bond sale.

 

 

 

 

Watch | Ratan Tata Had Four ‘Great Loves’, Two American, One Parsi, One Gujarati Who ‘Walked Away’

Thomas Mathew, whose book Ratan Tata: A Life was published just weeks after Ratan Tata’s death.

Ratan Tata, the former chairman of Tata Sons, who lived and died a bachelor, had four “great loves” in his life but never married any of them. This is revealed by his biographer, Thomas Mathew, whose book Ratan Tata: A Life was published just weeks after Ratan Tata’s death. Mathew worked closely with Ratan Tata while writing the book but it’s not an authorised biography.

In a 45-minute interview to Karan Thapar for The Wire, which reveals in detail Ratan Tata’s personality, his private life, the things that mattered to him, his relationship with his dogs, Tito and Tango, and his care for his staff, in particular, his cook, Rajen, Mathew also speaks about the four “great loves” in Tata’s life. Two of these were American women, one Parsi and the fourth a Gujarati.

The interview also focusses on Ratan Tata’s affection and love for his dogs. It seems, more often than not, he would name them Tito and Tango. He had, at least, three separate sets of dogs with the same name. When one of the Tangos broke his leg in 2008 Ratan Tata: “scanned the world for a vet who could save the limb” and eventually flew Tango to Minnesota.

Ratan Tata took particular care of his staff. Of Rajen, his cook, Mathew says Ratan Tata took great care of “Rajen’s every need, or rather, pampered him”. For instance, when Rajen wanted to learn fishing, Tata spent hours finding a suitable fishing rod for him.

Rahul Gandhi Wants Corporate India to Count the Cost of Modi’s Crony Capitalism

Whether Gandhi’s warning resonates with India’s corporate houses remains to be seen. Even if it does, would it spark off any pushback from them is a bigger question.

Congress leader Rahul Gandhi’s recent article equating oligarchies with the British East India Company has sparked off a debate that seemed predestined. Gandhi has spent the past few years targeting what he says is the partisanship of the Narendra Modi government towards industrial houses owned by Adani and Ambani, which have also cornered much of India’s new business contracts. He has unambiguously pointed towards episodes and occasions that indicated that state-backed institutions may have gone out of their way to protect their business interests.

Yet, the BJP could spin his attacks on Modi government’s alleged cronyism as his specific dislike towards businesses. The saffron party projected him as a dynast who could not bear flourishing business during the Modi regime. That a large part of his attacks on cronyism began during the farmers’ agitation against the controversial farm laws bolstered such a perception. A parallel bull run in the stock market led both institutional and retail investors to buy into the propaganda.

Ever since demonetisation, Gandhi has consistently spoken on economics matters. He built a case for a mixed economy, supported the idea of empowering MSMEs and creating an ecosystem where business ideas could be supported and infrastructure for those could be built in a planned manner. He devoted a large part of his canvassing during the 2019 and 2024 Lok Sabha elections to the commitment towards promoting and democratising business ecosystems in India, while critiquing the current model under the Modi regime that he believed has aided the concentration of capital in the hands of a few oligarchs through short-term and poorly-conceived economic policies.

Yet, Gandhi never really addressed the stereotype that the BJP made of him directly. His article is perhaps his first intervention aimed at countering the perception of him being anti-business.

Soon after his article was published, he asserted his points again in a video post on X, “I want to make something absolutely clear, I have been projected by my opponents in the BJP to be anti-business. I am not anti-business in the least, I am anti-monopoly, I am anti-creating oligopolies, I am anti-domination of business by one or two or five people.”

“I am pro-jobs, pro-business, pro-innovation, pro-competition. I am anti-monopoly,” Gandhi said.

He may have hit the nail on its head by drawing attention to the British East India Company’s exploitative business model. The timing, too, could not have been more correct, as his critique has also come in the midst of heated discussions among industrial groups on the issues raised by the damning Hindenburg Research report that linked the Adani group’s alleged stock manipulation and SEBI chairperson Madhabi Buch’s conflict of interest in the case.

Also read: Rahul Gandhi Must Resolve the Paradox of His Rising Popularity Even as Congress Languishes

Gandhi’s attacks on cronyism and encouragement of monopolistic capital addressed the concerns around growing inequalities and inequities until now, in what was aimed at building a political narrative for the larger electorate. But his article signals a renewed attack on the Modi regime in which his audience is India’s aspirational, upwardly-mobile classes.

He is hoping his critique may land in the ears of those who had to suffer huge losses in the stock markets after Union home minister Amit Shah encouraged them to keep investing days ahead of the elections, assuring them Modi was returning to power with over 400 seats. The post-election season for investors has been far from good. The NIFTY index dropped by over 6% in October; the Sensex fell 5.8% in the same month and has had its worst month since March 2020. India’s blue chip companies have reported a miss this quarter, pointing to a generic slowing down of the Indian economy. The markets may well be on a long correction path, given the large-scale exodus of FIIs from India to China.

Gandhi has unpacked the oligarchic trend for the ears of the diverse business landscape of India. “Their (oligarchic groups) core competence is not products, consumers or ideas, it is their ability to control India’s governing institutions and regulators — and, in surveillance. Unlike you, these groups decide what Indians read and watch, they influence how Indians think and what they speak. Today, market forces do not determine success, power relations do,” he said.

His article is also an appeal to corporate houses which believe in competitive markets. “Match-fixing monopoly vs fairplay business — time to choose freedom over fear,” read the carefully-worded headline of Gandhi’s article. It could just be a replay of what industrialist Rahul Bajaj in December 2019 had told the Union home minister Amit Shah at a private event.

“This atmosphere…it is certainly on our minds. Nobody will say…our industrialist friends will not say it. I will say that openly. An environment should be created. You are doing good work but if we criticise you there is no confidence that you will appreciate that. I may be wrong. But we all feel that…In UPA 2 we could criticise anyone…,” Bajaj had said about a pervasive fear of reprisals among business houses.

Whether Gandhi’s warning resonates with India’s corporate houses remains to be seen. Even if it does, would it spark off any pushback from them is a bigger question.

This piece was first published on The India Cable – a premium newsletter from The Wire & Galileo Ideas – and has been updated and republished here. To subscribe to The India Cable, click here.

The Paradox of India Mourning a Billionaire

The reverence for Tata after his death is rooted in a yearning for an era when aspirations felt innocent, before they became entangled with the anxieties of modern consumerism.

You can’t afford to be rich and nice unless you’re Ratan Tata. In today’s digitised world, you can get away with repugnant opulence, the disavowal of work-life balance, or even mass termination. People might repost a news clipping exposing your despicability, or carp on about how you’ve looted, displaced, and made the land that remains deliberately unliveable – but no one is going to buy any less of what you sell. There is just one caveat: your death will not be met with a woebegone public. You’re no Tata.

Tata’s death necessitated the moral court of the media landscape to seal any incriminating records. After all, what has he done, the still enamoured public might ask. He loves dogs, he does charity – Tata Trusts has already clarified they couldn’t care less about the write-off that might accompany this charity – and is all-in-all a sweet old man. How can you be mad at him, especially after his death?

After The Savala Vada, a satire news account on Instagram, posted a carousel of pastiche news headlines announcing Tata’s death, it was met with a flood of comments about how their choice of timing was ‘poor’. The (faux) headlines were squibs:

Humble Billionaire Passes Away in Country Where 60% Live Under ₹260 (sic) A Day”,

“Ratan Tata Passes Due To Natural Causes Unlike His Workers”, and

“National Icon, Billionaire, Genocide Enabler Dies”.

After a few days, the “editorial board” of The Savala Vada issued another missive. A chicanery, if you will: a statement that resembles the kind that companies like Tata’s are used to typing out after a disgruntled individual admonishes them. The statement launches into a series of allegations against Tata, linking his companies to everything from exploiting tribal lands and using child labour to collaborating with oppressive regimes, concluding with an insincere apology and a quote from Douglas Adams, a writer known for his humorous science fiction.

The Savala Vada’s target was uncritical hero worship, which has the penchant to lodge individuals like Ratan Tata onto a pedestal. The frenzied reaction to even suggesting that possibility is not only symptomatic of the fact that Tata has a brilliant PR team, who have clearly cultivated an atmosphere where dissent is rare, but also that his death is perhaps the perfect time for remonstration, as the increased attention on Tata now offers an opportunity for criticism to reach a wider audience. When most newspapers bundle up sentences for an editorial on how India has lost a visionary, it failed to account for a basic principle of journalism: nothing is one-sided. The question, then, should be what this tells us about Tata, and subsequently, what the reaction to his death signifies. More pressingly, what does it tell us about this country?

In the eyes of the fawning masses, Tata embodied two supposedly contradictory forces. One was the garb of a middle-class individual – humble, unassuming, marked by a genuine desire to improve things in the country. One could run into Tata anywhere and not notice him. He was just an ordinary man, an aam aadmi who even needed to borrow money for a phone call sometimes.  His mystique was his humility, which starkly contrasted with his unimaginable wealth and separation from the rough and tumble of ordinary life. The rich are supposed to be arrogant precisely because they are so distant from us. Tata, however, was one of us, and that was cause for both perplexity and admiration.

Perhaps this is not as big a contradiction as it seems. Just running through a list of things that Tata’s vast industrial machinery manufactured – from lorries to watches, salt to internet, steel and even educational and charitable institutions – Tata’s industries slip into and fill every crack in our third-world life, injecting a dose of reliability into our creaking infrastructure. He had to be ordinary so that he could inconspicuously insinuate himself into every aspect of our lives. At the same time, his image played a function more important than just normalisation: to limit aspiration. That is why Tata remained very different from our other billionaires. How could one aspire to be like Tata when he lived in a two-bedroom flat, wore ready-made clothes, and looked just like a regular uncle one runs into on the street? If one was middle-class in India – which is already to say that one was in the top 3% – that was already your life. What could be emulated were his stolidly middle-class virtues of humility, thrift, national interest, but not his desire, which, though perhaps unexpressed, in any case, was never manifest. What the middle-class Indian wanted to emulate was this lack of desire, this seemingly magnificent disinterestedness.

Death is a moment of reckoning. It is when someone dies that their existence is bombarded with the overwhelming recognition that they were important; Tata didn’t need death for that. Words like “humble”,“generous”, and “kind” chaperoned any news that spoke of him. He wasn’t thought of as a businessman, but an industrialist, and while the etymological difference is only a matter of scale, culturally, the distinction is less tenuous. Ambani is a businessman, and even though he is technically not part of the nouveau riche, he has the accoutrements of one: Antilla, a 27-storey skyscraper with a multi-level car parking facility that can accommodate around 168 cars, not to mention the grandiosity of the recent family wedding, replete with the assurance of never running out of wealth. Adani and Modi are a fraternity, so he also doesn’t get many brownie points with the liberal middle-class. Tata’s appearances alongside Modi are overlooked, as is the reason he’s able to donate so extensively to charity.

When faced with this reckoning, the middle-class Indian is stirred up. He then offers the only remaining counterpoint in his arsenal: the creation of jobs, the sustenance of an economy. Even if they might be unethical, shouldn’t we be thankful to these billionaires for that? These jobs allow us to buy things that make us who we are, insist these businesses, and the Indian middle class sings along.

Also read: Consumption Data Shows the Indian Middle-Class Is Shrinking

Post-liberalisation, the Indian consumer has become much more discerning and demanding, tricked into believing their carefully cultivated tastes are unique expressions of their personality, rather than the product of external forces. If you’ve ever stepped foot into a Zudio – a chain of fashion retail stores that is part of the Tata Group – you know how mind-bogglingly affordable those trending clothes are. The bargain basement’s ubiquity democratises fast fashion to the point of near-uniformity. At your next gathering, you’re almost guaranteed to spot a familiar face sporting the same outfit, a shared costume for our subtly dystopian present.

Luxury goods like expensive watches, diamond rings, and fancy vacations in the Seychelles or Maldives are now aspirational realities, tangible signs of a desired lifestyle that transcends mere basic necessities, rather than far-off distant dreams. This transformation of the Indian consuming class has had incredible effects on the distribution of labour in the economy, with a vast and underpaid service class labouring invisibly to maintain the comfortable first world illusion of certain pockets of society. Yet that has also led to the percolation of aspiration downwards, even if the way up has been effectively blocked by a lack of means, leaving many scrambling to acquire status symbols through precarious debt and readily available “easy payment” schemes in a world engineered to fuel such desires.

When it was released, everyone wanted the 1983 Maruti Suzuki 800, but few wanted a 2009 TATA Nano. Tata products, once symbols of aspiration, now represent the budget option, the bottom of the barrel. The Nano, a poor man’s aspiration, and the rest of Tata’s offerings cater to a romanticised past, a simpler time of cheaper goods and uncomplicated desires. The reverence for Tata after his death is rooted in this nostalgia, a yearning for an era when aspirations felt innocent, before they became entangled with the anxieties of modern consumerism. It’s a wake-up call that makes this millennial generation realise that they have been moulded into desiring subjects who unfortunately can never realise their desires. It is this tension, which one can find reflected in the various reactions to his passing away. In the end, the loyalty to Tata wins out for the Indian middle-class, over all other considerations. That shouldn’t be surprising. After all, as the idiom goes, hum sab ne Tata ka namak khaya hai.

Diya Isha is an editor. 

Huzaifa Omair Siddiqi teaches English at Ashoka University.

 

How a Weak Competition Commission of India Is Facilitating Media Oligarchies

Nowhere is this more evident in the case of Reliance Industries Limited.

There is massive concentration and conglomeration taking place in the converged media landscape of India.

The Competition Commission of India’s (CCI) decision-making is largely opaque and falls short of being evidence-informed. This risks it being seen as a facilitator of media oligarchies.

Nowhere is this more evident in the case of Reliance Industries Limited (RIL), an industrial group which has a major presence in multiple markets of broadcast audience, broadcast advertising and online video.

Successive governments’ response to RIL’s incremental expansion in the media economy shows the weaknesses in the existing regulatory framework.

This is evident in the recent coming together of RIL and the Indian arm of one of the largest global media conglomerates, Disney.

A decade of expansion

News reports portrayed this variously as an acquisition, a joint venture and a merger.

The principal actors – RIL, Viacom 18 and Disney – called it a joint venture, since they respectively held around 16%, 46% and 36% in the new entity. But in effect, it is owned by RIL, since it has majority control in Viacom18.

The deal follows a decade of RIL’s expansion into the media and communication industries.

In 2012, RIL waded into TV broadcasting by taking over two established multi-lingual networks, TV-18 and ETV.

This also gave it ownership of Viacom18, then an ascendent player in the TV entertainment segment.

These acquisitions, while achieved in unorthodox ways, did not carry threats of market dominance. There existed rival networks with larger audience share in the news and entertainment segments, across linguistic markets.

But the scenario heralded by this recent deal is totally different.

Among the top 10 broadcasters in 2023, those owned by Viacom18 and Disney were together estimated to harvest a viewership share upwards of 40%.

In 2016, RIL entered mobile telecommunications with the launch of Jio. It profited from a state falling short on enforcing corporate disclosures, retrospectively revising policies and overlooking procedural violations.

Having gained a licence for mobile telecommunications, Jio weaned away subscribers from incumbent telcos by “predatory pricing” – a  commercial strategy that also benefited from the CCI’s regulatory magnanimity.

Regulatory response

Given the new combine’s scale, and its implications for media, the CCI was expected to be precise and transparent in the queries sought from the companies involved.

News reports claimed CCI posed around 100 questions to Reliance and Disney. Neither the questions nor the responses are publicly available.

CCI’s summary order was quick to infer that this arrangement “will not cause any appreciable adverse effect on competition in India”. It also felt that “the exact relevant market definitions for evaluating the proposed transaction may be left open”.

The concept of relevant market, central to competition regulation, delineates the specific “product market” where substitutable offerings compete, such as news outlets in a particular language or subscription-based online video; and the “geographic market”, the territory where comparable services are traded.

In refusing to flesh this out in the RIL-Disney case, the CCI lost an opportunity to clarify a longstanding grey area in India’s complex, competitive and converging media economy.

This may be due to the time-consuming nature of this exercise, lobbies impeding such efforts, lack of internal capacity in the regulator and/or its inability to access requisite data from companies.

Multiple spheres of dominance

The combine heralds a high degree of concentration in two of the most lucrative TV segments, entertainment and news.

This will enhance its leverage over cable operators and direct to home operators.

Consequently, the new combine would wield market power in the wholesale business of TV distribution. It is unlikely that such a scenario will not impact the monthly tariffs paid by TV viewers.

Moreover, three online video platforms – Jio’s Jio Cinema, Viacom18’s Voot, and Disney’s Hotstar – will be owned by the combine, who will garner more than 30% of the existing user base.

This paves the way for RIL’s telecom arm, Jio, to bundle broadcast and native-online video content produced by Viacom18 and Disney for its subscribers.

It will not be surprising if Disney’s broadcast and/or HotStar’s online offerings are offered by the combine at a premium to subscribers of Jio’s rivals; or, some offerings are made exclusive to Jio’s subscribers.

Facilitating the oligarchy?

Following CCI’s queries to the parties constituting the joint venture, feedback from others in the business, and comments by the Ministry of Information and Broadcasting – details of which are not public – the combine proposed to modify aspects of the joint venture.

This was to ensure CCI does not initiate a detailed and lengthy investigation into the implications of this combine on the competitive milieu.

The ensuing detailed report by CCI, dated end-August but made public in late-October, approved the joint venture with the modifications proposed. However, this order falls short on procedural, substantive and empirical counts.

Astonishingly, it contains numerous redactions of words, numbers and even complete sentences – without any explanations whatsoever.

At places these seem to mask details of the internal shareholding and/or indirectly owned subsidiaries of the companies involved; at other places, revenues of individual entities are masked. Sometimes the names of entities and subsidiaries involved are blacked out.

This does not augur well on the institutional transparency and empirical accountability expected in an order from a regulatory body.

One of the proposals by the combine is to divest its presence in four TV segments (Marathi and Kanada entertainment, Bengali films, and Children) where the combined market share of its constituent broadcasters is more than 40%.

Magnanimous as this sounds, there still remains TV segments in at least two markets (Hindi entertainment and Hindi films) where the combine enjoys over 33% market share – the nearest rival having 15% share. CCI’s report is unconvincing why this will not cause appreciable adverse effect on competition.

Significantly, these voluntary divestments to offset market dominance were based on viewership share. This ignores evidence on the advertising share garnered by the combine.

In recent years, Viacom18 and Disney together gathered, by conservative estimates, a hefty 45% share of total TV advertising. The extent this may adversely impact the competitive milieu is not compellingly argued in CCI’s rudimentary analysis.

For instance, such a large market share will endow the combine with dis-proportionate power in dealings with relevant actors: it could extract higher rates from advertisers and/or goad advertising agencies to reduce their commissions.

That the new entity will wield a large degree of market share is starkly visible in the online video market. The report estimates three video streaming platforms under the combine to garner about 40% of advertising revenues in this market – with each of the nearest rivals accruing, on an average, less than 10%.

RIL’s entry and conduct in telecommunications had precipitated numerous dislocations in that business. Its recent consolidation across broadcasting and online video will cause dislocations in the converged media landscape.

This raises questions about equitable opportunities and constraints to innovation in the competitive milieu of one of the most dynamic media economies.

Vibodh Parthasarathi is an Associate Professor teaching media policy in the Centre for Culture, Media and Governance at Jamia Millia Islamia in New Delhi. 

Originally published under Creative Commons by 360info™.

The Commercial Vehicle Downcycle Is Impelling Productivity Concerns

For MHCV manufacturers, the recent contraction in sales could imply that the disproportionate gains in operating profits from selling premium large size trucks will start receding fast as they counter large-size fleet operators running excess capacity.

The tepid post-COVID recovery in commercial vehicles (CVs) is ironic to the claims of private capex revival along with a strong economy and the large government spending on highways.

In the second quarter of the financial year (FY) 2025, the leading players have reported 16.2% year-over-year (YoY) contraction in medium and heavy CV (MHCV) sales at 63,057 units. The declines are widespread spanning light and small CVs too. Companies attribute recent contraction to seasonal factors.

But the slackness has structural dimensions; the overall CV sales are 8.3% lower than the recent peak in the first quarter of FY19 and over the past 12 years it has remained flat (1% compound annual growth rate or CAGR, low growth period) following a robust 15% CAGR during the FY00-FY12 high growth period.  

The elasticity of MHCV sales to real GDP growth has fallen precipitously from 2.3x during FY00-FY12 to 0.2x during FY12-FY24, implying that every 100-basis point rise in real GDP now requires a tenth of CV sale growth than it did during the high growth period.

In fact, during the past five years the CAGR for LCVs and MHCVs – at -0.4% and -0.9% – corresponds to real GDP CAGR of 4.4%, implying negative elasticity. 

These are startling trends and deserve serious assessment. 

Substitution effect: Commercial vehicles versus railways

For MHCV (trucks), post-pandemic recovery has been sub-optimal with the current levels at 11.6% lower than the 2019 peak. Comparatively, over the past five years, the freight movement on railways expanded by 5.5% CAGR on total tonnage basis and 7.4% on net ton kilometres (NTKm). 

The superior performance of railway freight can be attributed to cheaper freight rate; while road freight rate increased by 5% CAGR over the past five years, rail freight remained nearly stagnant with 0.9% CAGR. 

In recent months all the three modes of cargo freight i.e road, port and rail have been slowing. Railway freight contracted by 6.9% YoY in August 24 after a decline of 3.9% in FY24. The combined freight handled by major and minor ports at 126.3 million tonnes has decelerated to 2.1% in August 24. 

Thus, while post-pandemic recovery resulted in stronger rebound in rail freight volume compared to roads, the recent contraction in truck sales appears to be on the back of the reinforcement of the substitution effect with the economic slowdown. 

This substitution headwind for MHCVs will likely persist as the freight moving capacity of the railway has expanded much greater than actual rail freight utilisation. 

Representational image: Trains on railways tracks. Photo: X/@EasternRailway

Diminishing profitability favoured larger tonnage truck operators

We measure the pricing power of fleet operators as a ratio of freight rate to diesel cost using the average for Delhi-Mumbai, Delhi-Kolkata and Delhi-Chennai. The pricing power index has recovered from the COVID lows (December 2021) by about 30% but they are still 20-35% lower than the 2015 levels. For less busy routes the erosion of pricing power may have been greater. 

Consequently, small fleet operators, owning trucks till 25 tonnes were pushed out of business even as larger fleet operators who could afford 25-50 tonners could run viable business, backed by lenders. But considering even the higher tonnage sales, the average CAGR during FY12-FY24 stands at 1.4% versus 0.3% for the number of trucks sold. 

It is untenable to assume that faster growth in 25-50 tonne trucks has been due to upgradations of highways. Had it been the case, it would have reflected in a larger number of LCVs sold that subserve the freight hubs, which is not actually the case. 

The contraction in small-size trucks has led to job losses in transportation. RBI’s KLEMS and PLFS reports show that the proportion of salaried jobs in the sector has declined to 35% in FY24 from 43.3% in FY19. There has also been a drop in the proportion of casual work jobs (11.9% versus 14.3%). These have forced a rise in dependence on low quality self-employment (53.1% versus 42.4%) implying a rise of 1.5 million between FY19-FY24 to 13 million. Consequently, the real wage in the sector has contracted.

All factors considered, the key factors behind the deceleration in trucks sold are the structural slowdown in economic activities, private capex and global trade. 

On global comparison, the post-2012 CAGR growth of truck sales for the US (3.7%) has been higher than emerging economies like India (1.1%) and China (0.7%). This is a reversal compared to 2000-2012 when EMs (China 8.7%, India 14.8%) outpaced AEs (US 0.1% and Europe 0.8%). 

Low truck sales growth amid rise in govt capex on highways

Highway road length grew at 5.8% 12-year CAGR (FY24, 150k KM), higher than 3.3% CAGR during the preceding 12 years. The real spending by the Union government on road construction has catapulted by 27% CAGR to Rs 3.5 trillion (FY24) from the earlier phase at 1.2%. 

We measure the productivity of highways as ratio of MHCV (trucks) sales to highway length. Indexed to FY12, productivity in the low growth period declined to 0.5x in FY24. Comparatively, in the high growth period (FY00-FY12) it increased to 2.6x. 

Increase in road construction without increase in CV sales is symptomatic of the fact that the multiplier effects in the form of employment commensurate, household income generation and private capex have been inconsequential. 

The fall in toll collections (Rs 5.8 billion in the first quarter of FY25, -22% YoY) along with the decline in truck sales imply erosion of return ratios and debt service capabilities of road toll projects. Given that most of the recent road project expansions have been on Hybrid Annuity Model (HAM), a significant portion of the risk will fall on the governments, states or centre. For the non-tollable portion, the lack of positive economic externalities to the public at large is overwhelmed by the financial burden of such large capex. 

The 12 times rise in outstanding debt of NHAI (Rs 3.4 trillion in FY24) since FY15, its minuscule revenue (Rs 340 million) and large debt servicing (Rs 600 billion) are emblematic of diminishing productivity. 

Overall, the structural aspects of low pace of freight availability symbolising a weak economy, the substitution effects favouring rail over road transportation and large trucks over small trucks are likely to weigh on the productivity of large-scale highway construction. While highway construction is an important enabler, it appears to have become an end in itself, thereby creating large financial and economic drag. While reports suggest that the government is planning to make NHAI debt free by FY28, the shift in allocation to the Union Budget since FY22 amounts only to a shift in the accounting of billowing public debt, which will eventually fall on the tax-payers. 

For MHCV manufacturers, the recent contraction in sales could imply that the disproportionate gains in operating profits from selling premium large size trucks will start receding fast as they counter large-size fleet operators running excess capacity and who will demand greater discounts. 

Dhananjay Sinha is co-head of Equities and head of Research of Strategy and Economics at Systematix Group.

‘Philanthropy Must Strengthen Self-Help’: Why Ratan Tata’s Words in 1996 Are Relevant Today

‘For instance, a company may donate a large sum for charity and yet discharge toxic effluents into a river or stream near its unit, putting the health of the local community at risk.’

A lot has been said about Ratan Tata after his recent death. He has been described as a man with keen business acumen, a humane person and a great philanthropist. But nowhere have his views on philanthropy been referenced, though he had definite ideas on how the rich and their trusts or foundations should use their money.

I had the privilege of interviewing him soon after he took over the reins of the Tata Trusts, for Sampradaan of which I was a founder director. The interview was published on July 2, 1996 in the first issue of Sampradaan’s newsletter. I believe it has abiding relevance even today.

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The name ‘Tata’ is synonymous with modern philanthropy in India. Sir Jamshedji, his two sons Sir Dorab and Sir Ratan, and JRD have pioneered and exemplified the concept of constructive philanthropy, of using private wealth to strike at the root of human suffering and poverty. Hence as the present head of the Tata group and as the doyen of the business community, Mr. Ratan Tata’s views on philanthropy are of particular interest. Some excerpts from an interview with him…

Mr. Tata, what is your vision of philanthropy in general, and Tata philanthropy in particular? Is it in any way different from that of your predecessors?

Our business philosophy remains very much the same as that articulated by my illustrious forebears, i.e., to create wealth for the nation and to create more employment for people so that they have better access to education and health. But we think more about being good corporate citizens – about participating in the development of the communities where we are located.

When did the concept of good corporate citizenship become important to the Tatas?

The concept is not new to the Tatas. Our ancestors and companies, besides undertaking important projects, were also working for the betterment of the community where they were located. The ideals were those of corporate citizenship, but the terminology was different. As for how we differ… Earlier there was more of charity in its elemental form of helping individuals facing a crisis. I tend to lay emphasis on self-help. While we always have a niche for individuals in distress (and while we could always be  human on that ground), I am keen to channel more meaningful amounts towards programs which have an element of self-help to put people on their feet. I want to discourage the sort of practice that existed in the past, of making handouts which were a glorified form of alms, because for some, the kind of money we used to give is no longer meaningful in the context of today’s prices and costs. We want people to know that money will only be available if they are willing to use that money for gainful activity to help them stand on their own feet.

Is there any field or cause in which you have a special interest, just as JRD had in population control?

JRD was very right in championing the cause of population control… But my own particular interest is in education, not so much formal and conventional education as vocational education and skills creation.

What would you say is your own particular contribution to the Tata philanthropy?

I don’t know that I have made any particular contribution, other than to bring about the self-help focus to our work. I have also tried to streamline the working of our Trusts to make for bigger impact. We are giving more meaningful amounts to a smaller number of grantees, rather than frittering away our resources in several small grants for unconnected purposes. We are also developing a better programme focus. We are simultaneously trying to bring the professional approach of our companies into our Trust. I think we have a responsibility to see that the funds are well utilised.

Also read: Ratan Tata Had the Curiosity of a Child and the Catholicity of a Researcher Committed to the Nation

Do you think there is a role for private philanthropy even where government is the dominant actor on the socio-economic front?

I believe philanthropy is not about giving money only—it means giving yourself, your time, talent, anything. To be philanthropic you have to care, and you have to want to make a contribution with no expectations of a quid pro quo, in terms of profits, business returns, image or whatever. It is more a question of saying you wish to give and not to take, or to give more than you take. It has to be embodied in a feeling that since you have enough for yourself you have an additional responsibility to uplift the levels of living of those that are less privileged around you, or to make a contribution to the development of a particular region or class of people… In this sense of doing something for others there is always a role for private philanthropy, whatever the government does or does not do.

Do you think the younger generation of businessmen and industrialists are as philanthropically minded as the older generation, or do you think there is less interest in philanthropy today, perhaps because religion, which prompted charitable giving in the past, has become less influential in action?

It is difficult to generalise in this regard; some are very motivated and others are indifferent. Those who are interested are probably still very motivated by religion or at least some secular ethic.

What is your own motivation? What prompts you to give time for your Trusts and other charitable organisations?

I don’t give as much time as I should or would like to. As to what drives me…I am already living a comfortable life and feel making more money or building a larger empire is less satisfying than the thought that one has brought happiness to someone or made a difference to the life of a community or generation. This desire to make a difference is not necessarily limited to one’s own community or country. Recently I was in Namibia and I felt the Tatas should do something for the people of that region in Africa, who have been exploited for hundreds of years, though the Tatas will gain nothing from a business venture there.

Can government do anything to motivate the corporate world to be more philanthropic? Will  more tax incentives help?

It is true that many Trusts are formed because of tax breaks. But to be motivated by tax breaks would be philanthropy for the wrong reasons. It would amount to hypocrisy. Either one cares or one does not. Just giving money is not enough. One has to interpret philanthropy in the widest sense. Being a good corporate citizen means more than giving money or charity as in times past. One must also consider it  in the light of what is morally right or wrong.  For instance, a company may donate a large sum for charity and yet discharge toxic effluents into a river or stream near its unit, putting the health of the local community at risk. That is like the mafia donating money to a philanthropic cause and thinking it absolves them of their guilt or responsibility.

Such people either do not understand fully the implications of their actions or if they do, they don’t care. Some try to buy the authorities so that they can carry on. I find this totally objectionable. If it happened in a Tata company, I would ask them to stop operations until the issue was resolved.

I am of the view that philanthropy has to come from within; no government can tell you what to do. A law may institutionalize philanthropy, choose whichever model you want to create, but it should be done for the right reasons. Otherwise, the money is just money; it may go for the right causes, but I would be concerned about such philanthropy.

Pushpa Sundar is an ex-IAS officer, and a writer.

What Make in India Has Brought to India

Ten years after the launch of the Make in India programme, India’s industry problem has deepened.

Last month, Narendra Modi celebrated the 10th anniversary of the Make in India programme by mobilising data which are contradicted by all statistical sources – Indian as well as non-Indian. By creating such a misleading impression, the prime minister of India makes course correction even more complicated, while the industry of the country has become more dependent of China than ever.

 In 2014, with ‘Make in India’, Modi’s aim was to achieve four objectives:

(1) to increase the growth rate of Indian industry to 12-14% per year;

(2) to create 100 million industrial jobs by 2022;

(3) to increase the share of the manufacturing sector to 25% of GDP by 2022 (a deadline shifted to 2025 a few years later); and

(4) to make India the ‘new factory of the world’, taking over from China by moving up the value chain.

Over 25 sectors of Indian industry were involved in this project.

Ten years later, not only have these objectives not been reached, but the situation has deteriorated.

Illustration: Pariplab Chakraborty.

The growth rate for industry is far from double figures: since 2014 it has averaged around 4%, with manufacturing even below this level. So much so that the share of manufacturing in GDP, far from having increased, has continued to erode, falling from 18.3% to 14.72% of India’s Gross Added Value between 2010-11 and 2019-20, before the COVID-19 crisis.

Two years after the crisis, this proportion had fallen to 14.70% in 2022-23, the lowest figure since 1968-69. And far from creating the 100 million jobs expected, industry has lost many jobs, with the number of manufacturing workers falling from 51.31 million in 2017 to 35.65 million in 2022-23, a fall partly linked to the COVID-19 crisis, which caused the number of manufacturing workers to fall to less than 30 million in 2021. Between 2016-17 and 2022-23, the manufacturing sector lost almost 1 million workers. 

This failure is partly due to foreign direct investment (FDI). The Modi government hoped to attract enough FDI to replicate China’s development strategy and become a manufacturing base for the rest of the world, given India’s low labour costs. Indeed, FDI has risen from $36 billion a year in 2014 to almost $85 billion by 2022. But this success needs to be put into perspective from two points of view. 

First, only a fraction of them – smaller and smaller since 2018-19 – can be considered as productive investments: out of more than $ 80 billion in FDI in 2020-21, only $ 21 billion fell into this category, or 3.1% of the countries gross capital formation. In 2018-19, the peak-year, productive FDI accounted for no more than 6.5% of gross capital formation. 

Secondly, to measure the real weight of FDI, we need to relate it to GDP. From this angle, the picture is different: as a percentage of GDP, FDI will account for an average of just 1.76% of Indian GDP over the period from 2014-15 to 2022-23, compared with an average of 2.14% of GDP over the previous decade, from 2007-08 to 2014-15. 

Thirdly, FDI has been declining significantly since 2022. It fell to just over $71 billion in 2022-23 to just over $10 billion in 2023-24, a fall of 60%. This is the lowest figure since 2007, when FDI accounted for just 0.7% of GDP, a record in independent India. These figures are counter-intuitive, as a series of massive, well-publicised investments created the impression that India was benefiting from a process known as ‘decoupling’ in the US and ‘de-risking’ in Europe, whereby Western firms that had invested heavily in China were partly withdrawing from that country for both economic and political reasons in order to diversify their FDI. But India does not benefit as much as other countries in the Indo-Pacific region – starting with Vietnam – from these flows. 

Fourthly, the majority of FDI since 2017 has been concentrated in some nine sectors, starting with services (especially IT), while 53 other sectors – mainly manufacturing – have received just 30% of total FDI.

Finally, the Make in India programme has failed to increase India’s merchandise exports, which have fallen steadily over the last 10 years, from 10.2% of GDP in 2013-14 to 8.2% in 2022-23. If the Indian industry fails to export more – in relative terms – it imports more, mostly from China.

To supplement the Make in India programme, the Modi government, since 2020, promotes production-linked incentives (PLI). The aim is to help investors operating in key sectors and to promote cutting-edge technologies to improve the international competitiveness of Indian firms. 

The cost of these PLIs to the state raises the question of both the sustainability of such an effort and its relevance, since such expenditure naturally comes at the expense of other items in the state budget. The issue is particularly sensitive when the government comes to the aid of large firms. The microprocessor factory that the American manufacturer Micron set up in Gujarat – which made the headlines in the media – represented an investment of $ 2.75 billion, of which Micron only covered a small part ($ 825 million), the ‘rest’ financed by the governments of New Delhi and Gandhinagar. More importantly, so far industrial investments remain rather low.  

Industrial investment at a standstill   

The rate of productive investment (Gross Capital Formation), after growing significantly in the 1990s and 2000s, has tended to weaken structurally: it fell from almost 42% in 2007 to 29% in 2020. It has risen to 34% by 2023, but this is still far from the what it was.

This curve is all the more worrying in that it is largely explained by the slump in private investment. The rate of private investment fell from 31% in 2011 to 23% in 2020, and although it has since recovered, it remained at 27% in 2022. Investment in the manufacturing sector has fallen particularly sharply, from 6.1% of GDP to 4.2% between 2011-12 and 2021-22. 

How can we explain the relative collapse in private investment?

Weak demand is a major factor here. Companies in the manufacturing sector are often faced with unused production capacity, making it unnecessary to expand their industrial facilities. Between 2011 and 2021, in 10 years the production capacity of Indian factories remaining idle rose from 18% to 40%, an extreme situation linked to the COVID-19 crisis. From 2022 onwards, this percentage stabilised to an average of around 25%, a far cry from the 2011 figure. The weakness of demand here stems from the thinness – or even the shrinking – of the middle class, whose consumption had, briefly, been one of the engines of growth in the years 1990-2000. 

What’s more, a closer look at the 2000s, the decade during which Indian growth flirted with double-digit rates, shows that investment was boosted not only by attractive real interest rates, but also by expectations that ultimately failed to materialise: the development model that India adopted in the 1990s encouraged the growth of inequality so radically that only a small minority of Indians really benefited. Since the turn of the century, there has been a spectacular increase in inequality, with the share of national income held by the richest 10% rising from 34.4% in 1990 to 57.1% in 2018. At the same time, the share of the same national income held by the poorest 50% fell from 20.3% to 13.1%. Admittedly, the national income has increased significantly in the meantime, but part of the middle class has nonetheless been impoverished, making certain consumer goods inaccessible. In fact, in 2017-18, for the first time since the 1970s, the National Sample Survey Office recorded an increase – albeit very slight – in the number of people living below the poverty line, from 21.9%  in 2011-12 to 22.8 % in 2017-18.  

The rich India cannot offer a sufficiently large and stable market to convince industrialists that they should invest. Nearly 800 million Indians are now eligible for food aid, a tangible indication of the narrowness of the market of solvent consumers. 

The low purchasing power of Indian consumers can be seen in the fall in the savings rate, which in 2024 was 5.3% of GDP, the lowest level since the 1970s. At the same time, households are taking on more debt, with loans taken out in 2023 representing 5.8% of the GDP, another near-record since the 1970s.

The low level of household savings is depriving banks of the resources they could use to lend to businesses, which are therefore seeing their potential investment projects thwarted even further. But if banks are not lending easily to businesses, it is also because their balance sheets have been burdened by Non Performing Assets, bad debts – those held with companies that cannot repay because they have not been able to make their investments profitable in the 2000s. At that time, unreasonable confidence in the future led to massive investments that were not paid for, leaving the banks very vulnerable. As a result, banks were very reluctant to lend to potential investors.

A final reason why Indian industry is currently struggling is its lack of competitiveness in relation to its Chinese competitors. As India has opened up its market as part of its liberalisation policy, it has allowed Chinese manufacturers to penetrate entire sectors of its economy.

Depending on China’s industry

In 2024, with $118 billion in merchandise trade, China once again became India’s leading trading partner, supplanting the United States, which had overtaken it for two fiscal years. At the same time, India’s trade deficit with China has widened from $ 46 billion in 2019-20 to $ 85 billion in 2023-24. India’s exports – worth just under $17 billion, less than in 2018-19 – consist mainly of raw materials (including iron ore) and refined oil, while China’s exports to India, worth over $101 billion (compared with $70.3 billion in 2019), consist mainly of manufactured goods, including machine tools, computers, organic chemicals, integrated circuits and plastics. 

While India produces almost half its electricity from coal, the country is relying heavily on solar energy to achieve its energy transition – but it is not producing enough panels to meet its needs, far from it. As a result, two-thirds of photovoltaic cells and 100% of wafers (the essential components of these cells) are imported. Overall, China supplies India with between 57% and 1000% of the components it needs for its solar panels. In the first half of the 2024 fiscal year, Indian imports of Chinese solar panels amounted to more than $ 500 million, to which must be added 121 million in imports from Hong Kong and $ 455 million in imports from Vietnam. In addition, during the same period, China sold 500 million photovoltaic cells for assembly – while Malaysia sold India $ 264 million and Thailand $ 138 million, figures that testify to India’s dependence on its foreign suppliers in this field. Although Indian companies are entering the market, they are not developing their own technology, but importing 70% of their equipment from China. India is increasingly resorting to non-tariff barriers to limit Chinese exports, but these are likely to be in vain if Indian manufacturers do not acquire the appropriate technologies.

The same problem can be found in the pharmaceutical sector, one of the flagships of the Indian economy thanks to the boom in generic drugs. A world leader, India accounts for 20% of the sector’s global exports, worth over $ 25 billion. However, the sector’s Achilles heel is once again a lack of research and development – not only have Indian companies often contented themselves with copying molecules, but they have also failed to invest in the development of active ingredients. Before the COVID-19 pandemic, two-thirds of the volume of active ingredients came from China. The government tried to encourage manufacturers to innovate in this field by subsidising their research and development to the tune of $ 2 billion. A few years later, despite this government stimulus, the situation remains largely unchanged, with Chinese inputs enjoying unbeatable competitiveness.     

Ten years after the launch of the Make in India programme, India’s industry problem has deepened. Not only does this setback pose a threat to national sovereignty of the country vis-à-vis China, but without a proper industrialisation process, the country will not be in a position to give any work either to the 10 million young men and women who enter the job market every year, or to those who would like to leave agriculture. The stakes are very high indeed.

Christophe Jaffrelot is research director at CERI-Sciences Po/CNRS, Professor of Politics and Sociology at King’s College London and Non Resident Fellow at the Carnegie Endowment for International Peace. His publications include Modi’s India: Hindu Nationalism and the Rise of Ethnic Democracy, Princeton University Press, 2021, and Gujarat under Modi: Laboratory of today’s India, Hurst, 2024, both of which are published in India by Westland.

Ratan Tata Had the Curiosity of a Child and the Catholicity of a Researcher Committed to the Nation

His legacy of generosity and purpose must continue in the times to come.

Ratan N. Tata took over as chairman, Tata Sons, in 1991, the year that saw the most transformative economic reforms in India led by the then finance minister, Dr Manmohan Singh. Leveraging these changes in the newly unshackled Indian economy, Tata’s resolve right from the beginning was to propel the Tata group to a truly global entity. When the group later acquired Tetley (2000), Corus (2007) and Jaguar Land Rover (2008) to emerge as the largest industrial employer in the United Kingdom, I remember my British clients saying jokingly that it is ‘East India Company happening in the reverse direction’. Little wonder, the group revenue which was around US $ 5 billion when he took charge soared 20 times to over US $ 100 billion by the time he left.

It was not easy for Ratan Tata to step into the big shoes of J.R.D. Tata who had successfully steered the group’s fortunes as its iconic chairman for more than five decades. Their leadership styles were different, yet Ratan Tata remained  deeply committed to JRD’s focus on philanthropy wherein two thirds of Tata group’s profits were channelised through charitable trusts and focused on education, skill development, healthcare, and rural development in India. Like JRD, he, too, internalised the belief that profits which come from the people must go back to them.

When he took over, many of major companies, namely Tata Steel, Tata Chemicals and Indian Hotels were run by veterans like Russi Modi, Darbari Seth and Ajit Kerkar who initially found it difficult to give up control. But Ratan Tata gradually paved way for the transition to new generation of leaders to take these companies to their next phase of growth. He could also visualise TCS’s emergence as a jewel in the Tata crown and the company saw a seamless transition from its founder CEO F.C. Kohli to S. Ramadorai. He gave complete freedom to TCS to manage its affairs that led to it going public in 2004 in what was then India’s largest ever IPO – which got oversubscribed many times. TCS remains what many call the group’s cash cow and one of India’s most valuable companies. Later TCS, with its vast resources, gave Ratan Tata the leeway to think big in taking the group global.

Tata knew what focus was all about. When he took over, there were over 100 companies in the group. With active inputs from consultants, the group exited from businesses like Lakme, Tata Oil Mills, ACC, Tata Textiles and a few others. Disinvestment from non-core and acquisitions in strategic sectors almost went hand-in-hand. The acquisition of VSNL in 2002 too helped enhance Tata Communications’ capabilities in the telecom sector. Corus and Jaguar Land Rover acquisitions are well known but the buying of Daewoo Motor’s truck manufacturing operations in 2004 was also quite strategic.

It is said that the sight of a family of four travelling on a two wheeler, all drenched in rain, led Ratan Tata to steer the design and manufacture of the affordable Tata Nano car for the masses at a price of just Rs one lakh. At that time, it was considered to be a marvel in value engineering by Tata Motors. Despite the initial success, the car did not do well in later years but Tata Motors could deploy those learnings to introduce many more exciting car models crafted indigenously. Realising the relevance of electronic vehicles amidst the challenge of climate change, Tata Motors has now become India’s highest selling car manufacturer in that segment.

When I was deputed by the Tata’s in 2015 to join the government of India as the CEO of the National Skill Development Corporation which played a pivotal role in the Skill India Mission, he was quite happy and said that the nation must come first in whatever we do in life. This fact is also reflected in the Tata Code of Conduct which is signed by each employee as an article of faith.

The Tata group’s values got so deeply embedded in me that it changed my career’s trajectory towards government, thinks-tanks and nonprofits. Ratan Tata once asked me about the specific steps which the government was contemplating to transform the skill development sector from being supply-driven to industry-demand centric. He also showed keen interest in second generation reforms which could trigger growth in India’s job market. I had a few answers but not all, because generating adequate jobs has remained a complex issue.

Also read: Skilling Alone Won’t Save Us: The Alarming Rise of Unsecured Jobs in India

However, his queries reflected the curiosity of a child and yet the catholicity of a researcher committed to the national priorities.

I remember my first visit to Bombay House and I was surprised to see stray street dogs loitering in the reception area and the corridor, instead of any visible opulence expected in most corporate headquarters. In a short while, I saw Ratan Tata walking in and gently cajoling the dogs who used to be fed by Bombay House. I later learnt about his deep commitment to causes like animal welfare and cancer care. Other than generosity, I learnt from Ratan Tata that simplicity and austerity are cherished values and not something that one should be ashamed of.

The acquisition of Air India was another feather in Ratan Tata’s  cap. It was a dream come true as it came a full circle since Air India was Tata Airlines before it was nationalised. Ratan Tata himself was a licensed pilot as well. He would have loved to live to see the turnaround of the airline and its emergence as a truly world-class carrier. Not many people know that Ratan Tata gave wings to many start-ups as well by funding them from his personal wealth whenever he saw promise in an idea which could be leveraged for breakthrough in business, community development or nation building.

His legacy of generosity and purpose must continue in the times to come, just as the philanthropic legacy continued after J.R.D. Tata left the scene and handed the baton to Ratan Tata. Providentially, Tatas as India’s largest business conglomerate happen to be controlled by two trusts (Dorabjee Tata Trust and Ratan Tata Trust) which own over 60% of Tata Sons, which acts as a holding company owning stakes in all Tata group companies.

The two Tata Trusts, which are the main shareholders of Tata Sons, typically receive substantial dividends from their ownership stake in Tata Sons, and a significant portion of these funds is directed toward philanthropic activities across India. Although the exact annual spending on philanthropy varies, Tata Trusts typically allocate between 60% to 80% of the dividends they receive to charitable projects each year.

For a general sense of scale, Tata Trusts has historically allocated between Rs 1,500 crore to Rs 2,500 crore (approximately $200 million to $350 million) annually to philanthropy. These funds support various initiatives, including healthcare, education, rural development, and arts and culture. These numbers can vary year-to-year based on the dividends received, Tata Trusts’ financial strategies, and the current focus areas of their philanthropic efforts, but the value of the philanthropy persists.

Jayant Krishna is former global capability centre head, TATA Consultancy Services (TCS). Krishna is also former CEO of the National Skill Development Corporation, PM’s Skill India Mission, ex-group CEO, UK India Business Council, founding CEO, Foundation for Advancing Science and Technology, and senior fellow, Center for Strategic and International Studies (CSIS).

Bengal’s Economy Has Always Relied on the Durga Puja – Will This Prove Much Too Dear This Time?

Protests and the lack of opportunities has led to thinning excitement for the busiest time for retail business in the state.

Kolkata: The usually bustling footpaths of Gariahat, known for their crowds of last-minute shoppers, are unusually quiet this year except for the weekends. Just days before the start of Durga Puja festivities, Kolkata’s signature festive energy feels subdued. The typical hustle and bustle in popular shopping hubs like Gariahat in south Kolkata and Hatibagan in the north, is noticeably lacking. Footpaths that are usually packed with eager shoppers seem sparse, and even the vendors’ calls for discounts have lost their usual vigour.

Though thousands have already taken to the streets for pandal hopping, ongoing protests and economic uncertainties have cast a shadow over the shopping season, leaving many businesses concerned about their sales.

“Who would believe Durga Puja is not even a week away? People aren’t coming out in numbers for their last-minute shopping this time,” said Panchu Saha, a roadside shopkeeper in Gariahat. 

In anticipation of large crowds during Durga Puja, the police had set up barricades and ropes at the Gariahat crossing. However, with the turnout lower than expected, these preparations went unused for large parts of the day. A police officer on duty noted, “Managing the parking of cars here before the Durga Puja used to be a nightmare. This year, it’s the same story, except this time we are managing protest rallies.”

Also read: A Durga Puja Like No Other: R.G. Kar Protests Cast Shadow over Festivities in Kolkata

Protests

Protests against the R.G. Kar rape and murder, and the state government’s reaction to it, continue unabated.

New Market, in central Kolkata, has presented a slightly different scene. By the afternoon of the last weekend before Durga Puja, the crowds of shoppers had begun to swell. 

Asmita Sengupta, carrying shopping bags as she hurried through New Market Square, shared, “Normally, the festive mood kicks off a month before Puja, with shopping. But given the current circumstances, the festivities don’t feel right. Children don’t understand much about what’s going on, so I bought something for them.”

Preparations begin for another protest against the R.G. Kar incident in central Kolkata. Photo: Joydeep Sarkar

Mausum Khan, a vendor selling goods on the footpath at New Market, gestured to a protest march on her phone and said, “Many people aren’t thinking about the Puja now. It’s only the fire of protest that’s burning in their minds.”

Durga Puja is the busiest season for retail business in West Bengal. Many blue-collar workers and state government employees receive bonuses during this time, stimulating a surge in consumer spending. For small retailers, especially in mass markets like Gariahat and Hatibagan, Puja sales are crucial for boosting their annual income.

Gupta Enterprises, a wholesale garment supplier to the entire state from Kolkata’s Burrabazar, painted a gloomy picture. Nilom Gupta, one of the directors, said, “It’s a long-standing tradition in this state to buy new clothes and household items for the next twelve months with this extra money. This time too, we have sent goods as per orders from various districts. We have not received any new orders in the the past two weeks, I’m a little surprised.”

What the numbers say

“This year, the market has been sluggish. A month was lost to protests. So, this year, we’ve had only 11 months of business. Compared to last year, our sales have decreased by 35% one week before Puja. Our average sales, which are typically higher in Kolkata, are much lower this time,” remarked Ramesh Pandey, an official running a shopping mall in Kolkata. 

According to the Kolkata Street Hawkers’ Union, the number of hawkers in Kolkata has increased steadily from 191,000 in 2011, with an annual growth rate of 0.8-0.9%. The pandemic further fuelled this growth as some unemployed individuals turned to street vending. With approximately 210,000 hawkers in Kolkata, the decline in sales during this year’s Puja season has come as a shock.

“Our estimates indicate a 45-50% drop in pre-Puja sales compared to previous years. We’ve spoken to regular customers and identified three main factors contributing to this decline. Despite rising prices, low-income buyers have experienced a decrease in income. This, coupled with job losses, has negatively impacted the market. Additionally, the eviction of hawkers has further worsened the situation,” said Asitanga Ganguly, a leader of the Left-affiliated Hawkers’ Union.

Sidewalk hawkers’ stores at Kolkata. Photo: Joydeep Sarkar

A dismal picture

Beyond the cultural spectacle, Durga Puja provides employment for nearly 3 lakh individuals in West Bengal. The surge in consumer spending during the festival has a multiplier effect, positively impacting the state’s overall economy. 

A 2019 study by the British Council estimated the economic value of creative industries associated with Durga Puja in West Bengal at Rs 32,377 crores (2.6% of the state’s GDP). With government support and incentives, this figure has reportedly risen to Rs 50,000 crores in recent years. To put this in perspective, renowned global festivals like Rio Carnival, Hanami, Oktoberfest, San Fermín, and Mardi Gras contribute between 1.35%-2.25% of their respective economies. However, many economists caution about the state’s over-reliance on a single festival. 

“The state’s reliance on subsidies and incentives to stimulate demand had proven ineffective. By neglecting investment, the strategy worsened supply-side constraints. Consequently, Bengal, historically a low-inflation state, experienced consistently higher inflation rates than the national average,” said economist Indranil Dasgupta. 

Adding to the challenges, mid-September floods devastated six districts, leaving many unable to participate in the usual Puja shopping frenzy.

“This Puja market has been declining since 2016, first with demonetisation, then GST, COVID, and now the protests,” said Sekh Azizur Rahman, a long-time roadside vendor in South Kolkata’s Gariahat. “Last year, I made Rs 1,700-2,600 daily. Today, I’ve sold goods worth only Rs 700. Can you imagine how bad the market is?”

Translated from the Bengali original by Aparna Bhattacharya.