Mukesh Ambani earned ₹90 CRORES EVERY HOUR since Lockdown, according to IIFL Hurun India Rich List.
Now, let that sink in.
The bigger question is,
WHAT’S FUELING HIS SKYROCKETING FORTUNE?
While fate of Reliance Industries Ltd.’s Future Retail acquisition remains uncertain, consolidation in retail space has raised murmurs of growing monopoly of the company in retail and some other sectors.
Mukesh Ambani is the richest man in Asia. And in October 2020, he surpassed Europe’s wealthiest man, Bernard Arnault (chairman of Moët Hennessy Louis Vuitton) to become fourth richest man in the world with a net worth of US$80.2 billion.
In 2014, before the government of Prime Minister Narendra Modi came to power, he was only ranked by Forbes as the world’s 40th-richest man, with a net worth of $18.6 billion.
The most shocking fact is that he added $28 billion to his fortune this year, despite the country facing a serious economic plunge. While there is no doubt that Ambani’s rise has been remarkable. How Ambani multiplied his wealth in these unprecedented and daunting times ?
There was a consensus among Indian policymakers at the time of 1991 economic reforms that economic liberalization would eliminate the nexus between the business elites and the politicians and thus free people to open and run independent production lines of goods and services to provide more opportunities and well-being to society.
But on the contrary, the relationship between these two groups further strengthened. Large investors, attracted by the opening of the Indian market, paid huge bribes to political leaders, who often became businessmen themselves and forced public banks to lend to industrialists close to them.
The admiration and support that both Ambani and Modi share is quite visible, as most of the time Ambani has fully supported the government’s decisions publicly. He lauded Modi’s demonetization policy as a game-changer, which is in fact laughable as it proved to be a failure by the RBI itself.
Ambani’s and Adani’s wealth has multiplied almost five times and three times respectively in the last six years. The key to Ambani’s soaring wealth is not innovation but monopoly. He holds a monopoly in every sector, whereby his company Reliance has a presence whether it is telecoms, oil, retail or entertainment. Reliance also acquired Netmeds and Urban Ladder.
There are many instances where he has used his political support within the ruling government to subvert laws into his favour. A couple of examples for same are mentioned below.
1. The COAI (Cellular Operators of India Association) called on the government to intervene urgently as Reliance Jio violated the Telecom Regulatory Authority of India’s order that all promotional traffic cannot exceed the 90-days upper limit. But TRAI amended its previous tariff order as well as changing the definition of significant market power (SMP), where an operator is deemed predatory with more than 30% market share. Today Jio’s market share is 34%.
2. Similarly, in January last year, the government of India revised e-commerce policy, which forbids e-commerce companies with foreign investment from selling more than 25% of their output via a single marketplace. It certainly hampers the growth prospects of foreign e-commerce players like Amazon and Flipkart. It was a win-win situation for consumers and e-commerce players. The government claims that the new law will ensure a level playing field and promote fair competition for domestic players. But the biggest beneficiary is India’s large retailers, and the largest of them all is Mukesh Ambani’s Reliance Retail.
Now, According to a recent report by Goldman Sachs’ review of e-commerce markets globally, the Indian e-commerce industry is likely to reach $99 billion in value by 2024, and Reliance will capture 50% of the online grocery sales through its recently signed deal with Facebook.
In 2018, Narendra Modi even allowed Reliance back-door entry to India’s largest public-sector bank, the State Bank of India, via its 30:70 joint venture with Jio Payments Bank, which had just gotten a license in 2015. So Reliance now has the enormous resources of the SBI at its disposal.
What’s interesting is that former SBI chairwoman Arundhati Bhattacharya, who closed the deal, had joined the board of Reliance Industries Ltd as a non-executive director for five years. So the SBI-RIL association under her tenure raises serious questions of conflict of interest.
it’s no rocket science to find why Reliance has the highest market capitalization and Ambani’s wealth surged so much. Because if the government changes the very basic rules of the game for every sector then it is not hard to pick winners and losers.