New Delhi, Sep 29: Charging the Narendra Modi government with bailing out corporate entities like the Infrastructure Leasing and Financial Services Ltd (ILFS) by using profit-making public sector undertakings (PSUs) like the Life Insurance Corporation, thereby jeopardising the savings of crores of Indians, the Congress on Saturday demanded that a probe be conducted into the whopping debt of the ILFS and the role of the Prime Minister in it.
The Congress also alleged that PM Narendra Modi’s pet project of GIFT City, envisaged by him during his tenure as Gujarat Chief Minister with much hype and hoopla under the aegis of Gujarat Urban Development Corporation (GUDC), was virtually a ‘gift’ to IL&FS.
The joint venture required the allotment of land to the extent of 886 at a lease rent of Re 1 for 99 years. This land has been mortgaged with various banks and financial institutions and more than Rs 1,100 crore had been raised. However, the entire control of development and choosing partners is lying with IL&FS whose contribution is merely Rs 2.5 crore for the 50 per cent stake.
Talking to reporters, AICC spokesperson Gaurav Vallabh said, 'Prime Minister Narendra Modi and Finance Minister Arun Jaitley duo appear to have taken a pledge to dismantle and destroy India’s financial services sector. The latest episode in this ‘Financial Scam Management’ series is the bailing out of Infrastructure Leasing and Financial Services Ltd (IL&FS), which is 60 per cent privately owned, out of which 36 per cent is owned by foreign entities and 39.43 per cent is owned by public sector banks (PSBs)/Life Insurance Corporation of India (LIC).
'IL&FS is saddled with a whopping long-term debt of more than Rs 91,000 crore, due to public and private sector banks. In fact, the total debt of IL&FS increased by a whopping Rs 42,420 crore in just 4 years of the Modi Government. This means that IL&FS’ debt was increasing at the rate of Rs 900 crore per month under this government. If we add long-term to short-term debt, it is more than Rs 1,20,000 crore.'
Blaming the Modi Government’s 'economic mismanagement' for leaving the IL&FS in a precarious financial situation, whereby it did not have the required cash to even sustain them and pay their employees and other dues, he said the same is reflected by the fact that for 2017-18, current liability of IL&FS has mounted to Rs 37,089 crore as against current assets of Rs 31,259 crore.
'This means that IL&FS will have a severe cash crunch and would not be able to pay off its debts as well as it will hamper its going concern. By forcing LIC and SBI to inject Rs 7,500 crore, the Modi Government is only providing a ‘band-aid’ to a problem, which requires a surgery. It will lead the publicly-held LIC and SBI into a cycle of servicing unfathomable debt of a private company, that is, IL&FS forever, in future. Naturally, such decisions of deep financial mismanagement being taken by PM and FM will have an adverse cascading effect on our economy.
'Also, Prime Minister Modi’s pet project of GIFT City which is pending since past 11years now, was virtually a ‘gift’ to IL&FS. This project has been a GIFT to IL&FS despite the fact that not even project management consultancy is being provided by IL&FS. The whopping debt of ILFS and PM Modi’s ‘gift’ of ‘GIFT City’ to it needs to be probed.’’
Mr Vallabh said that the bailing out of IL&FS by profit-making PSUs was a regular trend during the rule of the Modi Government.
'To cover its massive financial sins, the Modi Government’s modus operandi is to bail out corporate entities by using profit-making PSUs, thereby jeopardising the savings of crores of Indians. We have seen how ONGC was used to cover up the GSPC Scam, how LIC is bailing out a loss-making IDBI Bank and now how LIC and SBI are being used to bail out a 60 per cent privately-held corporate entity, IL&FS,’’ he said.
Describing the proposed bail out of IL&FS by LIC and SBI as just another classic example of how LIC and SBI were being forced by PM Modi to 'pilfer common man’s as well as public money by investing in a company whose top management has cheated millions of stakeholders by their fraudulent practices', he asked as to why the Modi Government was jeopardising the savings of 38 crore LIC holders and crores of SBI depositors by burdening them with Rs 7,500 crore ‘Band-Aid Package’ for IL&FS, which will lead to exposing to the entire Rs1,000 crore debt of IL&FS?
‘’Just two months back only, the savings of 38 crore LIC policyholders were being jeopardised by burdening them with Rs 13,000-crore bailout package of IDBI Bank. Unlike the IDBI transaction, the deal with IL&FS involves bailing out or rescuing foreign entities (36 per cent holding) using general policy holder’s or depositor’s or public money. Why is the Modi Government hell bent in pouring the hard-earned money of India’s people to bail out a semi-foreign entity?’’ he asked.
He also questioned why IL&FS had not been subjected to any oversight either by CAG or CVC. (UNI)