LIC Investment in Adani Group

LIC Investment in Adani Group

Why in News?

Citing a US media report, the opposition party of India alleged that Life Insurance Corporation of India (LIC) invested around $3.9 billion in Adani Group to benefit the Adani Company. The opposition party has urged the Public Accounts Committee (PAC) of Parliament to investigate this matter.

Highlights of the LIC–Adani Group Investment Allegation

• In October 2025, the US daily The Washington Post published an investigative piece claiming that the Indian government drafted a plan in May 2025 to channel about US $3.9 billion (roughly ₹33,000 crore) from LIC into Adani Group companies. According to the article, internal documents from the Department of Financial Services (DFS) and the NITI Aayog, coordinated with the Ministry of Finance, laid out the roadmap.
• According to the report, the core allegation is that LIC was advised to invest approximately US $3.4 billion in corporate bonds of Adani Group and an additional US $507 million to increase its equity stakes in certain Adani subsidiaries.
• The report claimed that these investments were timed when Adani’s businesses were under pressure for refinancing their debts and that government officials saw this as a signal to the market.
• According to the documents cited in the report, the Ministry of Finance officials reasoned that 10-year government bonds offered “limited upside” compared with yields of 7.5-8.2 % being offered by Adani Group bonds at the time. 
• Investment analysts quoted in the post flagged the move as “abnormal” for LIC to invest such huge sums in a private conglomerate, warning that any adverse business event at Adani could pose a “grave risk” to LIC.
• The report implies that external agencies influenced the investment decision, raising concerns about potential weakness in decision-making autonomy and the safeguarding of policyholders’ interests.

LIC’s Response Over the Adani Investment Allegation

• The Life Insurance Corporation of India (LIC) issued an official clarification, rejecting all claims made in the report about a government-backed investment plan in the Adani Group. 
• The company said that no such document or directive was ever prepared or circulated by LIC or the Department of Financial Services (DFS). 
• The corporation emphasized that its investment operations follow a transparent and rule-based system approved by its Board. 
• The company said that it always made its financial decisions with complete independence and integrity, ensuring the safety of policyholders’ funds.
• LIC clarified that its investment decisions are taken independently by an internal investment committee that follows established norms and due diligence processes. 
• The corporation stated that all transactions are reviewed by statutory auditors and monitored by IRDAI (Insurance Regulatory and Development Authority of India) to ensure compliance with regulatory norms.
• The corporation added that its annual reports and investment disclosures are made public as per the Insurance Act, 1938 and IRDAI Investment Regulations. These disclosures are evidence of its transparency and accountability.

Other Allegations on the Adani Group

• Allegations of Unfair Privatization: Adani Group has been accused of gaining benefits through selective privatization of public assets. It is alleged that airports, ports, and other key infrastructure projects were sold in a manner that favored the group. Critics claim that this process lacked transparency and limited competition. The allegation also states that several contracts were finalized at prices lower than market value, leading to financial losses for public authorities.

• Foreign Contracts: Previous reports alleged that Indian diplomatic channels helped the Adani group win major power and infrastructure deals in Bangladesh and Sri Lanka. It is claimed that diplomatic influence was used to create favorable conditions for the company’s bids in neighboring countries.

• Coal Import: The group has also faced charges of over-invoicing coal imports. It is alleged that Adani Group imported low-grade coal through shell companies at cheaper rates and later declared inflated prices in official bills. The Financial Times and the Organized Crime and Corruption Reporting Project (OCCRP) released findings claiming that between 2019 and 2021, coal shipments imported from Indonesia were billed at prices much higher than those declared by the exporting companies.

• Hindenburg Research Report: One of the most significant controversies emerged in January 2023 when Hindenburg Research accused Adani Group of stock manipulation and money laundering. The report came just days before Adani Enterprises was set to open a ₹20,000 crore Follow-on Public Offer (FPO) on 27 January 2023. Adani Group denied all charges and called the report “malicious and baseless.”

• Low-Grade Coal Quality Fraud: Another report from Financial Times in 2024 alleged that Adani Group sold low-grade coal as high-grade material to Indian power utilities. According to the report, the group bought coal from Indonesia in January 2014 at around $28 per tonne but later sold it to the Tamil Nadu Generation and Distribution Corporation (TANGEDCO) as high-quality coal at about $91.91 per tonne. This difference raised suspicions of large-scale invoice manipulation.

Role of the Public Accounts Committee (PAC) in Financial Oversight

• About: The Public Accounts Committee (PAC) is one of the oldest and most powerful parliamentary committees in India. It was first established in 1921 under the provisions of the Government of India Act, 1919. After independence, the Indian Constitution continued this tradition under Article 105 and Rules 308–312 of the Lok Sabha Rules of Procedure. It acts as a guardian of the public purse and ensures that financial discipline is maintained within all ministries and departments.

• Structure: The committee consists of 22 members, of which 15 are from the Lok Sabha and 7 from the Rajya Sabha. These members are elected every year according to the system of proportional representation by means of a single transferable vote. The Speaker of the Lok Sabha appoints the chairman of the committee. 

• Functions: The PAC examines the Comptroller and Auditor General of India (CAG) submitted audit reports in detail. It analyses whether the money allocated by Parliament has been spent properly and if the results achieved justify the expenditure made.

• The committee identifies irregularities, inefficiencies, and cases of misappropriation of funds.

• • The committee ensures that no government department overspends or diverts funds without approval. 
  • It checks whether financial transactions have followed the rules laid down by the Ministry of Finance and other regulatory authorities.
  • The PAC has the power to call for documents, summon witnesses, and examine government officials under oath.
  • The committee does not have executive powers to punish or penalize, but its findings carry significant moral and political weight.
  • It acts as a bridge between the government and Parliament by ensuring that the taxpayers’ money is used efficiently.