At a time when Adani group stocks have finally begun to turn green and recover after weeks of a bloodbath (after the Hindenburg report that came out on January 24), former RBI governor Raghuram Rajan has questioned India¡¯s market regulator SEBI.
Addressing the concerns around investigations in the Adani-Hindenburg row, ex-Reserve Bank of India (RBI) Governor Raghuram Rajan on Sunday questioned why markets regulator SEBI did not get to the bottom of the issues raised by the US-based short-seller Hindenburg, and sought to know if it needed help from investigative agencies.
"Why has SEBI not yet got to the bottom of the ownership of those Mauritius funds which have been holding and trading Adani stock? Does it need help from the investigative agencies?" Rajan told PTI in an interview.
Earlier last month, FM Sitharaman had asked for more time to be given to SEBI to understand Adani stock rout.
On what measures the government should take to improve oversight of private family companies to address worries after the Hindenburg allegations on Adani Group, Rajan said: "I don't think the issue is of more oversight over private companies".
The issue is of reducing non-transparent links between government and business, and of letting, indeed encouraging, regulators to do their job, he said.
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Adani Group is extending a worldwide roadshow as management seeks to reassure investors that the company¡¯s finances are under control.?Adani group will hold meetings with fixed-income investors from March 7 to 15 in Dubai, London and the US, according to a person familiar with the matter, Bloomberg reported.
The meetings could be key to Gautam Adani¡¯s efforts to shore up confidence in his sprawling ports-to-power empire which has been rocked by a report from US short-seller Hindenburg Research, that alleged stock manipulation and accounting fraud. The report shaved as much as $150 billion from the group¡¯s stock market value and sent bond prices plunging.
Sounding a note of caution, Rajan said that India is "dangerously close" to the Hindu rate of growth in view of subdued private sector investment, high interest rates and slowing global growth.
Hindu rate of growth is a term describing low Indian economic growth rates from the 1950s to the 1980s, which averaged around 4 per cent. The term was coined by Raj Krishna, an Indian economist, in 1978 to describe slow growth.
As per ET, Raghuram Rajan said that the sequential slowdown in the quarterly growth, as revealed by the latest estimate of national income released by the National Statistical Office (NSO) last month, was worrying.
The Gross Domestic Product (GDP) in the third quarter (October-December) of the current fiscal slowed to 4.4 per cent from 6.3 per cent in the second quarter (July-September) and 13.2 per cent in the first quarter (April-June).
The growth in the third quarter of the previous financial year was 5.2 per cent.?"Of course, the optimists will point to the upward revisions in past GDP numbers, but I am worried about the sequential slowdown. With the private sector unwilling to invest, the RBI still hiking rates, and global growth likely to slow later in the year, I am not sure where we find additional growth momentum," Rajan said to PTI.
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The key question is what Indian growth will be in fiscal 2023-24, Rajan said, adding "I am worried that earlier we would be lucky if we hit 5 per cent growth. The latest October-December Indian GDP numbers (4.4 per cent on year ago and 1 per cent relative to the previous quarter) suggest slowing growth from the heady numbers in the first half of the year.
"My fears were not misplaced. The RBI projects an even lower 4.2 per cent for the last quarter of this fiscal. At this point, the average annual growth of the October-December quarter relative to the similar pre-pandemic quarter 3 years ago is 3.7 per cent, as per ET.
"This is dangerously close to our old Hindu rate of growth! We must do better."
The government, he said, was doing its bit on infrastructure investment but its manufacturing thrust is yet to pay dividends.?The bright spot is services, he said, adding "it seems less central to government efforts."
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