Opposing the government's bailout package for the debt-hit Infrastructure Leasing & Financial Services (IL&FS), the Mumbai Congress on Friday warned of "an impending 'Lehman Brothers-type' economic crisis facing the country".
Accusing the Bharatiya Janata Party (BJP) government of 'poor governance' leading to the complete collapse of IL&FS, Mumbai Congress President Sanjay Nirupam asked the Centre to "stop pressurizing LIC and SBI" to bail out the company or face a grave Lehman Brothers type scenario.
"The 30-year-old infrastructure lending giant IL&FS has gone totally bankrupt now. But in just three years, the debts of the company jumped by 44 per cent and profitability declined by 900 per cent. What were the reasons for this? The entire stock market has been shaken the past fortnight over this issue," Nirupam told mediapersons.
Demanding a high-level probe into the reasons behind the sudden collapse of IL&FS, the Congress leader claimed it will expose the role of several BJP ministers who are misusing their positions to exploit the issue for their vested political interests.
Instead, he alleged that Prime Minister Narendra Modi and Finance Minister Arun Jaitley "are pressurising" the Life Insurance Corporation of India (LIC) and the State Bank of India (SBI) to bail out IL&FS with the money that belongs to the common masses of the country.
Nirupam pointed out that LIC, which has almost 29 crore policy holders, mostly common Indians, owns the highest -- 26.34 per cent take in IL&FS.
"The government wants both LIC and the largest public sector bank, the SBI to divert their monies to IL&FS solely to protect the interests of the foreign investors. If the Modi government fails to stop this trend of using public money to cover up its favourites, we may soon witness a Lehman Brothers like crash of 2008," Nirupam said.
Questioning why nobody has bothered when so many IL&FS board members quit their boards, he recalled how the Reserve Bank of India (RBI) had shown a red flag and virtually predicted the IL&FS crisis twice three years ago.
"What prevented the government from taking immediate action after the RBI warnings? What are they doing to ensure that none of the former IL&FS directors become (absconders) like Nirav Modi or Mehul Choksi," Nirupam asked.
He said IL&FS has about $500 million in repayments, but is left with around $27 million only, forcing it to put on sale its corporate headquarters this month, besides another around two dozen projects.
It plans to sell these assets to reduce the debt by almost Rs 30,000 crore, but that would be barely one-third of the total outstanding amount, and the repayments of $500 million are due within the second half of the current fiscal.
As on March 2018, besides, LIC, the other big-ticket stakeholders of IL& FS included Japan's Orix Corporation (23.54 per cent), Abu Dhabi Investment Authority (12.56), HDFC (9.02), Central Bank of India (7.67) and SBI (6.42) per cent.
The IL&FS, which has not financed any new infrastructure project since 2015, hopes to net around Rs 1,300 crore from the sale of its headquarters in the Bandra Kurla Complex.
--IANS
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