IL&FS for Modi Means ‘I Love Financial Scams’: Rahul Gandhi
Congress President Rahul Gandhi on Sunday, 30 September, took to Twitter to attack Prime Minister Narendra Modi over the IL&FS controversy, saying that the government was bending rules and letting LIC use people’s hard-earned money.
Gandhi alleged that while PM Modi as Gujarat’s chief minister had given a Rs 70,000 crore project to IL&FS, in 2007, he was allegedly letting the firm get a bailout from the Rs 91,000 crore default.
In another tweet, he said that the government was allowing LIC to wrongfully use people’s hard-earned money to help IL&FS, which for PM Modi means ‘I Love Financial Scams’.
IL&FS, where LIC is the largest shareholder with 25.34 percent stake, has a debt burden of over Rs 90,000 crore.
Government Monitoring Situation: Economic Affairs Secretary
The government is monitoring the situation of debt-ridden IL&FS and would take appropriate action to ensure that there is no undue impact on the financial system, Economic Affairs Secretary SC Garg said on Friday, 28 September.
Debt defaults by certain group entities of diversified IL&FS has triggered fears of liquidity crisis in the financial markets and the RBI has been taking steps to improve the overall cash situation.
Amid persisting concerns in the markets, the Finance Ministry on Friday had held a meeting with key shareholders of IL&FS – LIC, SBI and Central Bank of India – to discuss the current situation.
Stating that the government is monitoring the situation of IL&FS, Garg said it is a large company within the infrastructure space and there is a lot of connection with the government departments as it has executed a lot of PPP (Public Private Partnership) projects.
"Therefore it is an important, significant entity. The government would take appropriate measures to see that there is no undue impact on what happens in IL&FS. Government will ensure there is no undue impact on the system that this institution causes," he said.
The meeting, chaired by Garg, is believed to have discussed ways to sort out issues related to IL&FS so that contagion does not impact other sectors of the economy. LIC Chairman VK Sharma, SBI Chairman Rajnish Kumar and Central Bank of India MD Pallav Mohapatra attended the meeting.
In Mumbai, the Reserve Bank also met various shareholders of IL&FS.
About the IL&FS issue, Sharma said all options are open without giving specific details as to what the largest shareholder is going to do to save the company.
The LIC chief expressed confidence that over Rs 60,000 crore worth assets can be recovered by IL&FS while trying to work out solutions for the remaining Rs 30,000 crore.
Earlier this week, IL&FS Financial Services defaulted on interest payment and fixed deposits. This was fourth in the series of defaults by the group entity.
On Friday, LIC Mutual Fund said that IL&FS Securities Services has cleared its dues worth Rs 300 crore.
IL&FS – credited for building the longest tunnel in the country (Chenani-Nashri tunnel in J&K) – is sitting on a debt pile of over Rs 90,000 crore.