Forcing LIC to favour Adani
Thirumaran
That the Modi regime favours large corporates is well known. That the Adani group belongs to a charmed inner circle is also common knowledge. This is confirmed by the recent revelation by the Washington Post that the Union Ministry of Finance orchestrated a bailout of the group by Life Insurance Corporation (LIC), India’s premier life insurer.
Citing internal documents, the newspaper reported that the LIC was nudged by the Department of Financial Services, part of the finance ministry, in May this year to subscribe to $3.9 billion (Rs 33,000 crores) worth of bonds issued by entities of the Adani Group. This was at a time when the Group’s image – already bruised by the revelations made by the now-defunct Hindenburg, a New York based research firm, which accused the Group of serious violations of market regulations – faced a fresh set of criminal charges by US law enforcement agencies. Hindenburg, in 2023, had alleged that the group was significantly indebted, and used a network of share trades among connected parties in order to artificially boost the values of its shares, which, in turn enabled it to raise even more debt. Significantly, the grave allegations centred on the obscure identity of some of “investors” based overseas, in tax havens, which was a serious violation of securities market regulations.
Although these allegations were stonewalled by the Securities and Exchange Board of India, the market regulator, with aid from the Finance Ministry, the Adani Group was stung by fresh allegations by US law enforcements’ allegations in 2024. These agencies accused the group’s czar, Gautam Adani, and his associates of bribery, fraud and other corrupt practices. This is the context in which the Indian Finance Ministry urged the LIC to invest in the Adani bonds.
Within the same month, LIC turned up as the sole subscriber of the $585 million (about Rs 4,950 crores) bond issue floated by the ports subsidiary of the Group. These bonds were issued to refinance existing debt.
The Post reported that the documents revealed that the Finance Ministry, Niti Aayog and the LIC participated in the deliberations. The Finance Ministry shamelessly batted for the tycoon by terming him a “visionary entrepreneur”. The plan’s “strategic objectives” were aimed at ”signaling confidence in Adani Group” and, even more strikingly, “encouraging participation by other investors”.
The Ministry even suggested to the LIC that the Adani bonds were significantly more attractive compared to the Government of India bonds issued by the Reserve Bank of India on its behalf! To longtime observers of the LIC, this is a serious deviation from the institution’s stringent investment guidelines, which privilege safety over higher returns; the overwhelming proportion of its investments was in statutory securities, mostly government debt. This was not surprising given the LIC’s character as a refuge for millions of poor and ordinary shareholders who hold “small-ticket” life insurance policies, for whom safety and security matter far more than an illusion of higher returns that is also characterised by higher risk.
In effect, at a time when the Group’s viability was seriously in question among investors, the government swung its weight to move the LIC to invest in these bonds. In effect, the LIC was not just another investor in the market, nor the bonds just another business opportunity. Instead, the LIC was being used as a marquee investor to draw other financial players – local as well as overseas – to the Adani Group’s fund-raising schemes via bond issues. In fact, this is exactly what happened. A month after LIC ventured to buy the Adani bonds, US-based Athene Insurance subscribed to $750 million worth of bonds issued by the ports venture of the Adani Group. Media reports indicate that since the LIC’s bond purchase of May 2025 the group has issued bonds worth at least $10 billion. There are reports that at least Rs 13,750 crores ($1.625 billion) worth of bonds of the Adani Group have been subscribed by domestic investors, among them mutual funds, insurance companies and banks.
Significantly, none of the other investors – including entities such as the leading public sector bank SBI, nor the private ones such as the ICICI or HDFC – have an investment corpus that rivals that of the LIC. The LIC’s Life Fund – the massive pool into which insurance premia flow in and from which all liabilities are to be met – amounted to a whopping Rs. 47.85 lakh crores in March 2025. No Indian financial institution in India or any life insurer worldwide wields the kind of heft that the LIC commands. The corpus, which has been growing at about 10% annually in the last few years, is what provides LIC the clout in the market. Thus, when an entity like it is forced by the government to invest in the Adani bonds, other investors who were initially reluctant are now drawn to similar offerings by the group.
Not surprisingly, the LIC has rebutted the Washington Post story, and denied the existence of any document which showed its participation in the plan alleged by the newspaper. It claimed that its investments were purely based on its board’s decisions.
The Indian business media has largely batted for Adani and Modi. Significantly, despite going out on a limb to justify the LIC’s decision, it has largely skirted the most important question: why should the government direct the business decisions of India’s biggest financial entity? The suggestion that LIC’s investments in the Adani Group, which is now a dominant player in large swathes of Indian industry – ports, roads, airports, cement and now even data centres (in collaboration with Google) – make business sense, is besides the point.
So is the argument that LIC’s investments in the Adani Group are a fraction of its investments in the ITC, Tata or Reliance groups for the simple reason that these other conglomerates are much older; LIC’s investments in these entities have been built over a much longer period. In contrast, the Adani Group’s meteoric rise has coincided with the arrival of Narendra Modi at the helm in 2014. Dogged as it has been by scandals at every turn, there would thus be every reason to suspect the sustainability of such growth over a longer time frame, one which would be of interest to an investor like the LIC. Life insurers typically seek long-term investments, to match their longer-term liabilities. Unlike what the business media would like us to believe – that these were just good business opportunities for the LIC – the long-term risks posed by such investments are what are relevant to the LIC and its ability to redeem its promise to millions of Indian policy holders.
The Modi regime has persistently stonewalled any coordinated investigation into the affairs of the Adani Group. The allegations have covered a range of violations – from spurious invoicing to grave violations of market regulations. The latest instance, of a key Union Ministry directing the country’s biggest financial institution to invest funds belonging to generations of policy holders in the group, is yet another reason why an all-encompassing probe – preferably by a Joint Parliamentary Committee – is necessary to break the nexus between Big Business and those running the government.
