2023: Is India at War?

Jana-gana-mana-adhinayaka, jaya he Bharata-bhagya-bidhata

Like most of us, I proudly sang the national anthem every single day in school.

But to be honest, I never really took interest in knowing the meaning of the lyrics of our anthem. Until now...

Jana-gana-mana-adhinayaka jaya he Bharata-bhagya-bidhata means 'Thou art the ruler of the minds of all people, dispenser of India's destiny.'

On a deeper level, as per Tagore, the composer of our national anthem, it means, "The Lord of Destiny will guide through every rise and fall, its people."

And why is this so significant today? Because, the lord of destiny is not a mere mortal, never has been...

It wasn't King George, when the British ruled India at the time this song was written in 1911.

This lord wasn't Nehru, the first prime minister of independent India.

It is not Narendra Modi, our current prime minister and its certainly not an Adani or for that matter any other mortal.

And it will never be...

Throughout history, people have believed, that India's destiny lies in the hands of a few chosen people.

In the past, it was its Rajahs and Badhshahs, then its colonial rulers or in the modern day, its government or perhaps a few powerful businessmen.

But this belief has always been flawed.

There is a thing about destiny. It may be delayed but it cannot be denied.

India has always been destined for greatness. The 'lord of destiny' has always shone bright on India.

India and China, after all, are the world's only major nations that embody grand civilizations.

Let us not forget, for almost 2,500 years until the beginning of British rule in the country, India was one of the largest economies in the world.

While the colonial rule was a dark period in India's history, the country has quickly rebuilt itself after independence to become the fifth largest economy. It's expected to become one of the most powerful countries in the near future.

Over the last few years, India has been at the front and centre of everything and everywhere. Be it the world's largest companies or the globe's leading economists, everyone seems to agree that India is the place to be over the coming decades.

According to Morgan Stanley, India would drive a fifth of the world's growth as its GDP doubles from US$3.4 trillion to US$8.5 trillion by 2032 making it the world's third-largest economy.

It seemed like India had emerged as the only bright spark and a ray of hope as it continues to be the fastest growing economy of the world in recent times.

But is the world willing to let India take its rightful place as a global leader?

Are the super powers happy to watch India transform from being merely an influential entity into one whose weight and preferences define international politics?

It seems not...

In recent weeks, the narrative has suddenly changed, or at least attempts have been made to question India's outlook.

While criticism from political opponents within the country is part and parcel of politics, what's different this time is the condemnation that is suddenly pouring in from across the world.

Once again, these critics have chosen to intertwine India's destiny to the fate of a handful of people, be it our political leaders or a businessman and his group of companies.

This is something that makes even an apolitical person like me sit up and take notice.

Truth be told, I have never cared much for politics. Since 2014, I have watched quietly from the side lines as our country has seemingly taken two opposing sides.

On one side, we have people who hail our prime minister as 'the lord of destiny' who shall make India great again.

On the other, we have critics who believe that India will languish or get much worse, again all thanks to the same 'lord of destiny,' our prime minister.

But lest we forget, India has its own destiny...

No one man has or ever will control it. Our great nation is perfectly capable of forging ahead collectively to make it the greatest super power the world has ever seen.

Hence, choosing a side is irrelevant. I for one will still refrain from choosing any one side. But it does makes one wonder... Is there an attempt at a global level to curb India's rise? Is there a sinister plot from outside the country to tarnish and taint India's governance, democratic polity, and institutions. Or are the risks for real?

Is India in a Cold War?

It all started on 24 January 2023, the day New York-based short-selling firm, Hindenburg, issued a report against the Adani Group.

The report accused the Adani Group of "pulling the largest con in corporate history," alleging stock manipulation, accounting fraud, and other malfeasance.

While a report, such as this against a particular company or businessman should ideally have no bearing on an entire country and its economy, this report seemed to do just that and more.

Within hours of it being published, sceptics questioned the relationship between India's business and political elite, doubting whether India, faced with accusations of crony capitalism, could ever become a global powerhouse.

Questions were also raised about the regulatory effectiveness and accountability of Indian institutions, which usually attract foreign investment in India.

There is no doubt that the valuations of Adani group companies had reached inexplicable levels.

Further, the group was on an acquisition spree adding Rs 1.55 trillion (tn) of debt in the last four years. Hence, it was heavily loaded with debt.

So, understandably, the group was an easy target for a short selling company. Or so it seems at first glance.

But there is a view that the timing of the report seems suspicious. Adani supporters questioned the timing of the report as it was revealed right before the company's FPO.

For a moment, lets discard that notion. After all, that is at a company level and it has nothing to do with India.

But why was the report published just two days before Republic Day?

On this Republic Day, for the first time, India broke from tradition, in order to get rid of its colonial vestiges.

Indigenous 105-mm Indian Field Guns offered the 21-gun salute to President Droupadi Murmu instead of the vintage 25-pounder guns used before to reflect upon the "Aatmanirbharta" in defence.

But unfortunately, India's attempt to showcase its military prowess and Aatmanirbharta to the world was overshadowed by the barrage of criticism towards the country on account of the Hindenburg report.

The report was also timed a week before the finance minister, Sitharaman presented the last full union budget before the 2024 elections.

The Adani stocks selloff that followed put an added pressure on the government to reignite the stock market.

Even though the market initially gave a thumbs up to the budget, strong selling in Adani group stocks affected trade sentiment and brought the whole market down crashing Sitharaman's party.

Since then, various reports across the world have emerged questioning the integrity of our country's institutions, even the sustainability of India's growth story.

The New York Times published a scathing article titled, "Gautam Adani's Rise Was Intertwined with India's. Now It's Unravelling."

The Financial Times published a piece, titled, "The Adani affair: the fallout for Modi's India."

And just when one thought, the newspapers would move on to the next breaking story, American billionaire George Soros stepped in claiming that Modi and Adani are close allies and their destiny is intertwined.

The billionaire also asked why the Indian prime minister was silent on this matter and not answering questions from foreign investors and in parliament.

It seemed like there was a concerted effort to dissuade existing and potential investors away from India by portraying India as a country which is clearly not a safe destination for foreign capital.

The scandal has put the Modi administration under heightened scrutiny about entanglement of public purpose with private profit. This might be a cause of concern with the general elections coming up in 2024.

Political instability at this juncture, when India is all set to take off, might just end up being the shackles that hold it back.

The fallout has already resulted in a major blow for Indian tycoons and their businesses. For instance, look at Vedanta.

When the company recently tried to secure finances for US$1.5 billion (bn) loan and bond repayments between September 2023 and January 2024, it hit a roadblock.

Worried bondholders of Vedanta Resources have already driven the price of the August 2024 note below 70 cents on the dollar. They are concerned that the company might not be able to raise funds in time for repayment.

The private sector plays a critical role in any country's economic journey. India is no exception.

But to insinuate that one business group of India could yield so much influence over the entire economy seems too extreme.

India is far too large for this apocalyptic viewpoint. The stock market in India is broadly diversified, its growth precedes Adani's, and it will survive no matter whatever happens to Adani.

The Hindenburg report and its motivations need to be thoroughly investigated to bring back credibility to India and its institutions.

The allegations and claims against the Adani group by Hindenburg are not something that Dalal Street heard for the first time.

Savvy investors should have anyway stayed away from Adani stocks simply because of the high valuations.

But the bitterness with which the foreign media and certain powerful individuals have attacked India raises doubts about powerful forces opposed to a strong, powerful India.

Take the case of Soros and his recent rant against the Indian leadership. Some in our society might say he means well and is only "looking out" for us Indians. But does an American have a right to interfere in India's democratic processes?

Would an Indian billionaire be allowed to do the same in America? Absolutely not!

In the United States, there are several laws and regulations in place to prevent foreign interference in US elections. In the past, western countries used hard power through colonisation, military force, or other means to attack a country. A classic example of this is India's invasion by Britain.

Today, soft power is often used for modern day conflicts.

Social media and other means are used commonly to influence the public's opinion and views about issues and create social discord.

Let us not forget the BBC documentary titled "India: The Modi question" that was also released just a few days before the Hindenburg report.

Why does a foreign news agency choose to come out with a documentary 20 years after an event, a year before the general elections?

And if it is only presenting 'factual information,' without any bias, then why does the documentary not mention the verdict of the Supreme Court of India?

Even with all its advancements, unfortunately even today, there is a clear imbalance of power between India and western super powers.

A post in a credible Indian newspaper has no bearing in the US, but an article in the New York Times can easily shape global views on India.

It seems entirely plausible there may be a collaborated effort by the global super powers to deny India its place among them.

India's response to the Russian invasion of Ukraine has been distinctive among the major democracies and among US strategic partners.

Despite its discomfort with Moscow's war, India has adopted a studied public neutrality toward Russia.

For many in the west, including President Joe Biden's administration, India's neutrality has been disappointing because it signalled a sharp divergence between the alliance of US and Europe and New Delhi on a fundamental issue of global order.

India has dismissed the perceived hypocrisy of the West. Far from apologetic, its tone has been unabashed.

Since the beginning of the Ukraine war, twenty prime ministers, ministers, and secretary level officials from 17 countries have visited India.

Over the last year, India has been in the limelight being the only country in the world to snub the powers that be of the west openly, forcing them to accept its decision.

While the US has repeatedly issued statements saying that it understands India and Russia's long-standing relationship, it's unlikely for the US, used to calling the shots, to quietly accept an upcoming power's refusal to join hands with it.

One could also wonder if the BBC's documentary now is reflective of the British mindset which refuses to accept that a country once ruled by them can surpass them to become the 5th largest economy of the world.

India' recent responses to Russia's invasion of Ukraine and other issues may have driven home to western democracies that India's strategic interests and values do not necessarily align with theirs.

And this is a worry for the west's self-proclaimed "Custodians of Democracy."

Just days before these controversies began in January 2023, India had showed its ambition to play a greater role in world affairs during the Voice of the Global South Summit, an online meeting the country hosted on 12-13 January.

According to the government, 125 developing nations took part in the conference, discussing a range of issues.

"Your voice is India's voice and your priorities are India's priorities," said Indian Prime Minister Narendra Modi in the opening session. "Our aim is to amplify the Voice of the Global South."

Using its new G20 presidency, India is hoping to lead these developing countries and help them voice their dissent.

Developing countries have been hit hard due to higher food and energy prices and the effects of global warming and geopolitical tensions in recent times, for which they hold developed nations responsible.

Being the unofficial leader of all of these countries and their voice in international forums makes India suddenly a very formidable adversary to the west.

The G20 summits are crucial for the BJP government party ahead of the 2024 general elections.

If the current regime can successfully pull off India's first G20 presidency, it would build a strong foundation for Modi to project power both domestically and abroad.

All of this does make one wonder, do recent events point to something deeper than what we see?

For decades, the US and its counterparts ignored India, thinking it was a regional power in south Asia with little global weight.

And there is some truth to that. In the past, India was a less than great power attempting to act like a great one.

But in recent years, the gap between India's ambitions and capabilities has dramatically narrowed.

Imagine a horse that was never in the reckoning to win. All of a sudden, this horse is racing side by side with the favourites.

Are the top contenders going to just fold up and admit defeat? Or are they going to fight with whatever means possible to retain their top spot once again?

Basically, that is where India is at now. It is suddenly relevant to the world and it is vying for the top spot.

Would countries with a lingering element of imperialism, be suddenly happy and willing to share the stage with India? More so, allow India to take centre stage and dictate terms to them?

Sadly, no. The West has always believed it has a 'public duty' to influence countries such as India towards the 'correct course.'

Especially if India's development and national interests contravene their vision for what India should become.

While India is always called "The world's largest democracy" by its western counterparts, it does not necessarily mean these countries treat India as an "equal," so to speak.

There are several ways to hurt a country, especially one which is expected to be among the top 3 economies as early as 2030.

As India challenges the west's monopoly and makes political choices that part it from the western path of development, the west will begin to depict India as a threatening country.

This happened with China as well.

In the early days of China's growth from the 1980s to the early 2000s, its western peers believed that China would conform to the Western model.

However, when it became clear that China would not conform to the western model, and would pursue its own development path, the west became hostile.

Hence, one would not be paranoid to believe that these recent events could be the work of a handful of individuals and organisations at the behest of their nations to derail India's rise to power once more.

A cold war is a conflict between countries that doesn't include actual warfare. The most famous example is the 20th century conflict between the US and Russia.

As World War II transformed both the United States and the USSR, turning the nations into formidable world powers, competition between the two increased.

This gave way to the start of the Cold War.

India is going through a massive transformation and becoming a major centre of power.

Today, India is the US and its allies' main competitor as it has the fastest-growing economy and is projected to become the third-largest economy by 2032.

This might just be the beginning of a long drawn cold war with India on one side and the imperialist countries on the other.

To many, that might sound like tough odds for India. But, if I were a betting man, I'd still bet on India. After all, I might not believe in any mere mortal but I do believe in God.

And India does have the "Lord of Destiny" on its side.

Who are you betting on?

Disclaimer: This is an opinion piece, and these are the personal opinions of the writer. They do not reflect the views of Equitymaster.