India Parliament Adjourns for a Second Day Over Adani Issue

Feb 03, 2023 by Bloomberg
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Parliament House on the opening day of the Budget Session in New Delhi, India, on Tuesday, Jan. 31, 2023. 2023. India will unveil its budget Wednesday, testing India's Prime Minister Modi's fiscal mettle seen as key to boosting investor sentiment even as it will likely leave less room for handouts a year before he seeks a third term.

India’s opposition stepped up pressure on Prime Minister Narendra Modi over his links with tycoon Gautam Adani and both houses of parliament were adjourned for a second day over raucous demands for a parliamentary investigation in the stock rout in his companies.

The main opposition Congress party is also planning nationwide protests Monday to highlight the risks to millions of small investors because of the exposure of state-owned institutions in Adani’s businesses.

The Congress party will protest in front of the offices of Life Insurance Corporation and State Bank of India, general secretary K. C. Venugopal said in a statement. “The government can’t jeopardize the hard earned money of the people of India to profit the crony friends of the prime minister.” 

Deepening concerns that the savings of ordinary Indians could get eroded carries serious political risk for Modi, who is looking at a third term in office in elections due next year. The Indian prime minister and the billionaire are said to be close.

Both hail from the western state of Gujarat. Adani has closely aligned his business interest with Modi’s development goals, building capital-intensive infrastructure such as ports and airports and generating employment. 

Parliamentary Affairs Minister Pralhad Joshi told reporters on Friday that the government has “nothing to do” with the Adani issue.

However, state-run LIC is India’s largest life insurer. With over 250 million policy holders across the country’s 1.4 billion population, it is among the country’s most systemically important institutions.

LIC is an investor in five Adani companies, with stakes ranging from 1% to 9%. Its investments total 364.75 billion rupees ($4.5 billion) in Adani Group companies, the insurer said in a statement. State Bank of India, the country’s biggest lender, has said its exposure to the Adani Group is well below the central bank’s framework for large exposures.

Opposition parties are demanding Modi’s government order a parliamentary or judicial investigation into the crisis that’s hit Adani Group companies, a fallout of allegations of widespread fraud and market manipulation from US short seller Hindenburg Research. 

Parliament was also adjourned Thursday after pandemonium broke out when opposition’s demand for a debate on Adani was rejected.

(Updates with details and background.)

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By Bibhudatta Pradhan , Abhijit Roy Chowdhury

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