Modi govt made LIC invest $3.9 bn in Adani despite controversies: Report

The Modi government reportedly orchestrated a plan for the state-owned Life Insurance Corporation of India (LIC) to invest approximately $3.9 billion in businesses controlled by industrialist Gautam Adani, according to an exclusive report by The Washington Post.

The strategy emerged in the spring when Adani, whose empire spans ports, airports, and energy ventures, faced mounting debt and U.S. allegations of bribery and fraud, which had caused major American and European banks to hesitate in providing loans.

Government coordination behind LIC funding

Internal documents obtained by The Washington Post showed that the plan was drafted and pushed by officials from the Department of Financial Services (DFS) and LIC, with ultimate approval from the Finance Ministry. Officials cited the goals of "signaling confidence in Adani group" and "encouraging participation from other investors."

The plan was executed swiftly. In May, LIC financed a $585 million bond issue for Adani’s ports subsidiary—a move immediately criticised as a potential misuse of public funds intended primarily for poor and rural families.

Investments in bonds and equity

The proposed strategy suggested LIC invest roughly $3.4 billion in corporate bonds issued by the Adani Group and deploy an additional estimated $507 million to significantly raise equity stakes in subsidiaries including Adani Green Energy Limited and Ambuja Cements. Officials noted that Adani’s bonds offered returns of up to 8.2 percent, compared with 7.2 percent on 10-year government bonds.

Risks acknowledged but action recommended

Government documents acknowledged that Adani’s securities were "sensitive to controversies" and highlighted that LIC had lost approximately $5.6 billion in paper gains after the 2023 Hindenburg report. Despite this, officials recommended the investment, stating it "aligns with LIC’s mandate" and "supports India’s economic objectives."

Experts describe the move as a "vivid illustration of Adani’s clout" within Prime Minister Narendra Modi’s government, suggesting it demonstrates "crony capitalism." Adani Group has denied any "preferential treatment" or "undue political favour."

Congress attacks government

The Congress party criticised the government, calling the revelations a “Modani joint venture” that misused LIC and policyholders’ savings. The party condemned the investments, calling them a misuse of policyholders’ funds. 

Congress demanded a full investigation by a Joint Parliamentary Committee, noting it had been pressing for scrutiny for nearly three years since its 100-question series Hum Adani Ke Hain Kaun (HAHK). The party added that Parliament’s Public Accounts Committee should immediately examine how LIC was compelled to invest in Adani Group companies.