MUNDRA, India — On a recent wind-whipped morning, a steel-hulled behemoth arrived at a desolate stretch of India’s western coast, groaning with enough coal to power a city of 1 million people for more than two weeks.
The ship, the Vanshi, was carrying coal from Indonesia, a two-week trip across the Indian Ocean. India has its own abundant reserves of coal, which raises a question: Why did India need to go so far to get something it already had?
For Gautam Adani, the power mogul, the answer was simple: The easiest and most profitable way to meet India’s rising demand for electricity is to avoid the hassles, divisive political confrontations and practical inefficiencies of India. In the spirit of the workaround ethos typical of India’s private sector, Adani is working around the subcontinent itself.
He owns the Indonesian coal mine, the Korean-made cargo ship (named for his niece Vanshi), the Indian power plant and, most important, the private Mundra port. He owns coal mines and a major port in Australia, and has built his own private railroad spur in India. His business plan is to do as much as possible without relying on the creaky infrastructure of the Indian state.
“He is able to do so well partly because he is very entrepreneurial and has found the right opportunity,” said Eswar Prasad, an economic adviser to India’s prime minister. “But it’s a symptom of a dysfunctional state. He is able to deliver something more effectively than the state.”
Today, India is increasingly turning to the private sector to deliver the electricity needed to maintain rapid economic growth into the future. India’s economy is growing at more than 8 percent annually, but is badly constrained by an inadequate power supply after years in which the government dominated the power sector and failed to keep up with growing demand.
The rise of Adani attests to a broader shift, as the private sector is playing a greater role in areas once controlled by the state such as telecommunications, ports, airports, banks and infrastructure. At a global level, this contrasts sharply with China, where huge state-owned enterprises dominate strategic industries and lead the country’s global expansion. Adani recently had to outbid the Chinese for his Australian port.
In India, though, the success of private tycoons has created a paradox: India’s moguls are essential to the country’s success and admired for their ability to get results. Yet their staggering wealth is made possible in part by their coziness with powerful politicians who help arrange environmental clearances, land use rights and other thorny issues.
