A Financial Crisis in India Remains Unlikely Following the Adani Scandal

Financial turmoil at the Adani Group, an Indian conglomerate with close ties to the government, is unlikely to trigger a broader financial crisis in India because its total financial liabilities seem to be relatively small, though the episode may hurt Prime Minister Narendra Modi's government politically. India's Adani Group conglomerate, controlled by Indian billionaire Gautam Adani, saw the value of its listed companies plunge dramatically in late January and early February after investment research suggested that Adani's businesses had used a web of shell entities to manipulate stock prices in order to issue more debt. The Adani Group has denied the allegations. This decrease in value forced the company to cancel its $2.4 billion share sale on Jan. 31, and on Feb. 6-7, Adani announced his intention to pre-pay loans, including loans backed by Adani Group shares, to calm investor sentiment and demonstrate that the conglomerate has sufficient liquidity. The...