On February 2, 2023, news broke of the short-selling, leading to the stock collapse of the Adani Group, headed by the world's second wealthiest man, Gautam Adani. On February 3, American media was flooded with images of the catastrophe of the train derailment in East Palestine, Ohio. At face value, one might write off these instances as the daily disasters of the modern age. These two incidents are worlds apart and seem disconnected, but they stem from the same issue– privatization and private interests in infrastructure.
The transfer of goods and services from public/government to private control has broad social and political implications, including steeper consumer costs as private companies increase prices. Additionally, privatization has implications for employment and labor conditions, as private companies may be more likely to slash jobs or reduce benefits. Others argue privatization can undermine communal ownership and control of critical infrastructure, losing accountability and transparency. Privatization is pushed by people who utilize the broader societal needs for goods for personal profit. This exorbitant level of profit achieved allows lobbying for government laws and regulations which continues as a feedback loop, increasing profit and corporate power over public interests.
Today, corporations are incentivized to undertake projects frequently regarded as public goods, as it is portrayed as profitable. In the U.S., 85% of national critical infrastructure is owned by private entities. Globally, the U.S. ranks 13th in infrastructure, which might not appear terrible, until reflecting on the resources and wealth available. These statistics model the shortcomings of public goods based on profit incentives and patterns of private ownership. This ranking will likely further decline, as infrastructure is under-serviced. The American Society of Civil Engineers warns that, "deteriorating infrastructure, long known to be a public safety issue, has a cascading impact on our nation’s economy, impacting business productivity, gross domestic product, employment, personal income, and international competitiveness."
Modern and growing economies are extremely dependent on national infrastructure for transportation and trade. India’s roads spanned 6,371,847 km and 68,103 route-km of railways from records in 2021. While much of this is governmentally managed, other projects are outsourced or use public-private partnerships, which still hand over control to the companies. The Adani Group exemplifies private sector investment and management of critical national infrastructure, including over 300km of railway in a single project. The group’s investments in infrastructure are tied to the daily life of India’s 1.42 billion people.
Public infrastructure projects are generally more regulated, because of government oversight, which typically includes stricter protections over environmental concerns. In the private sector, one sees the impact of Adani Group's coal mining operations on displacing local communities and the environment or the government's interest in covering up failures like the chemical exposures in Ohio. Adani’s displacement of people can be seen beyond through the land acquisition which buys out homes, but also unlivable conditions created by water and air pollution due to mining activities. When putting the pieces together, it can be seen that Modi and the Bharatiya Janata Party (BJP) encourage and support the Adani projects to avoid scrutiny of government projects and increase their wealthy donor’s business endeavors.
While not a mainstream discussion, this can become a contentious debate around government spending, and private responsibility or lack of such to the public. Governments are motivated to use private companies for large-scale projects to avoid accountability and redirect their resources of time and money away from communal goods. Defending this state motive, people argue that privatization will increase efficiency and innovation in regard to infrastructure development and management. In reality, it leads to understaffed crews, increasing layoffs, not taking precautions regarding working conditions, and the deterioration of the infrastructure, like currently in the US. Further, it encourages competition for contracts, encouraging the cutting of corners, saving time and money, and prioritizing the paycheck at the end for the company instead.
The stock market performance of the Adani Group, or other similar instances may impact infrastructure development in the country, but the extent of this impact can vary. As stock prices experience a sustained decline, it decreases investor confidence, preventing investment in new infrastructure projects, and slowing down development. Their diversified business portfolio indicates investment might return, but it bodes poorly for people dependent on the railways, energy, and trade. There have been numerous concerns about the Adani Group's involvement in the construction of large projects, like airports and ports, which are crucial to daily life. The reach of private groups like Adani into the lives of the average consumer must be recognized and exposed. These actions are especially pertinent because the average consumer is unaware of funding sources for these necessary projects, yet their lives depend on said projects.
International reliance on greedy corporate industrialists cannot continue. Our current sourcing of infrastructure has the potential to lead to further long-term challenges when these companies fail to continue their projects or no longer have the incentive to keep up maintenance. The potential for private profit is not worth the risk of economic downfalls of specific corporations destroying the people’s livelihood, in their ability for modern mobility. The risk of infrastructure crumbling globally is a direct result of American pushes for privatization and the international endorsements of this strategy. The detrimental effects of unstable physical infrastructure and corruption of government and corporate interests will continue harming the people of any nation should the current trend of inaction continue.
This all begs the question:who will dominate the landscape of public necessities in the future? The answer must be emerging from the aim of generating equity, instead of monetary growth for the elite. Infrastructure under private ownership being returned to state oversight is the first step, as it goes back closer to the interests of the people in a democratic society. Infrastructure is an integral part of daily life for all, and democratic institutions are meant to serve such public necessities.
Citations
Adani Group, Road, Metro and rail: Adani Group. Adani Group - Growth with Goodness. (2AD). from https://www.adani.com/businesses/road-metro-and-rail
Advantages and disadvantages of privatization in India, reasons. Infinity Learn. (2023, March 6). from https://infinitylearn.com/surge/english/article/pros-and-cons-of-privatization/
Business Insider, The 21 countries in the world with the best infrastructure. Business Insider. (2016, October 5). https://www.businessinsider.in/finance/the-21-countries-in-the-world-with-the-best-infrastructure/slidelist/54693930.cms#slideid=54693917
Central Intelligence Agency. (2022). the world factbook- roadways. Central Intelligence Agency. from https://www.cia.gov/the-world-factbook/field/roadways/
Hill-Gray, R. (2021, November 10). What percentage of infrastructure is privately owned? Market Realist. from https://marketrealist.com/p/how-much-infrastructure-is-privately-owned/
India - rail lines (total route-km)2023 data 2024 forecast 1980-2021 historical. India - Rail Lines (total Route-km) - 2023 Data 2024 Forecast 1980-2021 Historical. (2023). from https://tradingeconomics.com/india/rail-lines-total-route-km-wb-data.html
Mandavia, M. (2023, February 10). Adani Crisis complicates India's infrastructure ambitions. The Wall Street Journal. https://www.wsj.com/articles/adani-crisis-complicates-indias-infrastructure-ambitions-f2149d6e
McBride, J., & Siripurapu, A. (2021, November 8). The state of U.S. infrastructure. Council on Foreign Relations. from https://www.cfr.org/backgrounder/state-us-infrastructure
Smee, B. (2021, May 15). Adani admits breaching environmental conditions for Carmichael coal mine. The Guardian. https://www.theguardian.com/environment/2021/may/16/adani-admits-breaching-environmental-conditions-for-carmichael-coalmine#:~:text=Adani%20has%20admitted%20breaching%20its,without%20a%20promised%20wildlife%20safeguard.
Thomas, C., Ahmed, A., & Klara, A. (2023, February 2). Adani's market losses top $100 bln as crisis shockwaves spread. Reuters. https://www.reuters.com/world/india/adani-group-chairman-says-withdrew-share-sale-insulate-investors-losses-2023-02-02/#:~:text=Adani%20Enterprises%20shares%20tumbled%2027%25%20on%20Thursday%2C,closing%20at%20their%20lowest%20level%20since%20March%202022.
Reed, N. (2023, February 24). NTSB chair: East Palestine train derailment was '100% preventable'. Scripps News. https://scrippsnews.com/stories/ntsb-initial-findings-of-east-palestine-ohio-derailment/#:~:text=When%20conductors%20noticed%20the%20temperature%20of%20253%20degrees%2C,Palestine.%E2%80%9CThis%20was%20100%25%20preventable%2C%E2%80%9D%20Homendy%20said%20Thursday%20afternoon.