The Insolvency and Bankruptcy Code (IBC) came into effect on May 28, 2016, with the President's assent. It was introduced in Parliament as a framework to resolve insolvency proceedings between corporate giants and individuals within a specific timeframe. In 2025, certain amendments to this code were introduced and passed. Under the IBC, if a company goes bankrupt and a resolution is not possible, there are clear procedures to sell the company’s assets through an auction. This is known as the liquidation process. For this, the National Company Law Tribunal (NCLT) appoints a liquidator. Before the auction, two independent valuers are employed to determine the market value of the assets. The reserve price for the auction is fixed based on this valuation. It goes without saying that this reserve price is often much lower than the actual amount the banks are owed. The law mandates that the reserve price must not be disclosed during the auction, and the deal is finalised at a bid above this amount.

What is a Haircut?

Under the IBC, a haircut refers to the concession made by banks or financial institutions on the total amount due to them. Simply put, it is the difference between the total amount a company owes a bank and the actual amount the bank recovers through the IBC auction process. In reality, the haircut has become a legal tool to write off massive loans given to corporate giants without attracting public scrutiny. Commercial banks usually disclose exact figures regarding non-performing assets (NPAs) and write-offs in their balance sheets. The Reserve Bank of India (RBI) also releases these figures, and the government provides them in Parliament when requested by members. However, no data has been published to date regarding the total amount forfeited under the guise of haircuts.

A Deceptive Shift: From Revenue Foregone to Tax Incentives

India first introduced the ‘revenue foregone’ statement in the 2006-07 Budget. This was during the first UPA government led by Manmohan Singh and supported by the Left. This statement was included to ensure transparency regarding the revenue the government chose to waive through tax exemptions. However, from the 2015-16 Budget onwards, this document was renamed the ‘statement of revenue impact of tax incentives’. Along with this, a system of classifying tax benefits as ‘conditional’ and ‘unconditional’ was implemented. With this move, the Narendra Modi-led government skillfully obscured the actual extent of tax waivers granted to corporate houses. The haircut under the IBC is essentially another form of this deception.

From 2014, when the Modi government took office, until 2025, commercial banks in India have written off loans amounting to Rs 17,93,379 crore. The year-by-year breakdown of these write-offs is recorded in Chart 1 below:

Year-Wise  Haircut Figures (2017–2025)T

In these write-offs, small loans account for less than 15%. Approximately 56% of the total written-off amount belongs to large industries and services, amounting to roughly Rs 10 lakh crore.

Crucially, the haircut figures mentioned earlier are not included in these write-off statistics. When Rajya Sabha member A A Rahim questioned the Ministry of Corporate Affairs on this, Nirmala Sitharaman replied that banks recovered Rs 3.58 lakh crore from 1,119 loans following haircuts. She clarified that waivers through haircuts are not classified as ‘write-offs’. Look at how expertly the true picture of a massive heist is being hidden.

The loot carried out by corporate giants through haircuts over the last decade is shocking. Videocon, which owed banks Rs 46,000 crore (though owner Venugopal Dhoot told the court the actual figure was Rs 65,000 crore), was handed over to the Vedanta Group for a mere Rs 2,900 crore -- a 94% haircut. Alok Industries’ Rs 30,000 crore debt was settled for Rs 5,000 crore, and Lanco Industries’ Rs 47,000 crore debt for Rs 5,300 crore. While media reports suggested Anil Ambani’s Reliance Communications’ Rs 47,500 crore debt was transferred to Jio Industries for Rs 457 crore, the final figures remain undisclosed.

Meanwhile, the Modi government’s primary crony, Gautam Adani, through his companies, Adani Properties, Adani Good Homes, Adani Power and Adani Ports & SEZ, acquired the Rs 61,832 crore debt of 10 smaller corporate entities for just Rs 15,977 crore. In effect, Adani took over the massive assets of 10 companies with a 74% haircut, blessed by the central government.

The Real Write-off: A Massive Loot

According to various reports from the Insolvency and Bankruptcy Board of India (IBBI) and ICRA Research, an analysis of the average concessions given through haircuts from 2017-18 to 2024-25 showed that the figures ranged from 52% to 82%, with an average haircut of 68.5% (see chart).

Amount written off by Scheduled Commercial Banks From 2014-15 to 2024-25

According to the finance minister’s reply to A A Rahim, Rs 3.58 lakh crore was recovered from 1,119 loans. If this recovered amount represents the remaining value after an average 68.5% haircut, then the amount waived through haircuts is approximately Rs 8 lakh crore. When you add this Rs 8 lakh crore to the Rs 17.39 lakh crore written off over the past 11 years, the total actual write-off stands at a staggering Rs 25.39 lakh crore!

It is vital to remember that the same rulers who struggle to allocate Rs 2,80,000 crore for the welfare of backward classes, Rs 7,500 crore for Ayushman Bharat, Rs 9,650 crore for social security, the same rulers who painstakingly allocated Rs 86,000 crore for the Mahatma Gandhi National Rural Employment Guarantee Scheme —which was restructured under the name 'VB-G-RAM-G' to cut budget costs — along with other welfare funds, are the very ones secretly writing off the massive loans of corporate monopolies.

The true face of this ‘crony haircut’ policy must be exposed. Pressure must be exerted on the RBI and the finance ministry, and this issue must be raised forcefully in Parliament. A massive protest led by the working class must rise against the pro-crony capitalist policies of the Union government.