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Unmasking India’s crony capitalist oligarchy

By Pranab Bardhan

13 Feb 2023 · 4 min read

Editor's Note

As risk-averse Western companies now leave China, many see India as the main beneficiary. But recent events highlight systemic problems with India's economy, argues Pranab Bardhan in PS.

BERKELEY – The recent allegations of accounting fraud and stock manipulation against Indian multi-billionaire Gautam Adani made by Hindenburg Research, a New York-based short-selling firm, has startled many in the financial world. The episode is a necessary reality check for those who are expecting India’s star to burn brighter in the global economic firmament as China’s dims.

The allegations have highlighted some of the systemic issues that plague the Indian economy and often go ignored, particularly its extreme inequality and corporate concentration. A small slice of the economy produces capital- and skill-intensive goods to meet the demands of the wealthy, whereas most other sectors by and large suffer from insufficient demand and weak productivity, resulting in low aggregate investment and high unemployment.

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