LIC-Adani Row: Is Public Money Being Used For Crony Capitalism?

The Life Insurance Corporation of India (LIC) has recently come under fire for its decision to fully subscribe to Adani Ports’ Rs 5,000 crore bond issue, a move that has sparked intense public debate about the intersection of state policy, public sector investments, and corporate debt. Critics have raised concerns over the lack of transparency and the implications of such a significant investment, especially given that no other institutional investors showed interest in the bond issue.

LIC’s role as the sole buyer has led to accusations of coercion and cronyism, with many questioning the wisdom of using policyholders’ funds in this manner. “Adani issued bonds worth Rs 5,000 crore, and when no one came forward to buy them, LIC used citizens’ money to scoop up the entire issue,” remarked one frustrated commentator. “If Adani Group collapses under its debt mountain, who will answer for the losses suffered by LIC policyholders?”

The criticism has not been limited to individual commentators; civil society and political voices have also expressed alarm. One critic went so far as to accuse the Adani conglomerate of treating government institutions as a “piggy bank,” questioning the silence of opposition parties. “How can they let LIC, which handles public money, accept a bond with just a marginal 50 basis points above standard fixed deposit interest—without any participation from other financial institutions?” they asked.

In defense of its decision, LIC officials have pointed to the significant increase in their investments in Adani Group companies, which surged by 59 percent in the fiscal year 2023–24. A senior official stated, “Our investment rose from Rs 38,471 crore to Rs 61,210 crore within a year—a gain of Rs 22,378 crore.” They further emphasized that the 15-year bond carries an annual interest of 7.75 percent, which they view as a long-term value proposition.

However, many remain unconvinced by this rationale. A retired banking analyst commented, “7.75 percent for a non-convertible debenture (NCD) with no other takers is not a lucrative offer—it’s a red flag. If the market isn’t biting, should a public insurer step in as the only buyer?” This sentiment reflects a broader concern about the financial prudence of the deal and the potential risks involved.

The systemic implications of this investment decision have also raised alarms. Critics argue that public financial institutions may be under pressure to support select industrial empires closely aligned with the ruling government. “The Modi government’s brazen cronyism has pushed LIC to act as a backstop for Adani,” said a political analyst. “Public sector banks have already sunk Rs 94,400 crore into the group. Now, LIC is being used as a safety net when international confidence is clearly eroding.”

Adding to the unease is the backdrop of global investigations into the Adani Group, which has been implicated in fraud and bribery allegations by U.S. prosecutors. Despite these serious concerns, Indian public institutions continue to increase their exposure to the conglomerate. Observers warn that this situation transcends a single investment decision. “This is not how legitimate democracies function,” stated a governance watchdog. “There must be accountability. The ‘Chowkidar’ appointed to safeguard public resources appears indifferent, if not complicit. We’re frogs in boiling water—by the time it’s too late, there’ll be no way to undo the damage.”

While the Rs 10,812.5 crore that LIC expects to receive over the next 15 years may seem reassuring on paper, skeptics argue that the real risk lies in the potential collapse of Adani’s debt-fueled growth model. Without a diversified investor base and amid rising global regulatory scrutiny, such exposure could prove economically disastrous and politically explosive. As the debate continues, the implications of LIC’s investment decision will likely resonate far beyond the financial realm, raising critical questions about governance, accountability, and the role of public institutions in a democratic society.