The Congress on Wednesday accused the Narendra Modi government of bringing India to the "verge of economic collapse" and demanded a Supreme Court-monitored probe into "financial mismanagement" in the Infrastructure Leasing & Financial Services (IL&FS) group, which has over Rs 91,000 crore in debt.
Congress spokesperson Manish Tewari claimed the company was on the verge of bankruptcy and warned if that happened it would have a domino effect and "far reaching consequences" on the country's economy.
"This could be termed as the 'Lehman Brothers moment of India', as the collapse of Lehman Brothers in United States led to the 'great economic meltdown' of 2008...Something similar is happening in India today," he said, warning that "the Indian economy may plunge into a very deep crises".
The Congress leader alleged that the Prime Minister's Office and the Finance Ministry was putting pressure on the Reserve Bank of India (RBI), State Bank of India (SBI), Life Insurance Corporation (LIC) and National Highways Authority of India (NHAI) to bail out the company, and sought to know the rationale behind it.
He said IL&FS is an unlisted infrastructure development and financing company, which is 40 per cent owned by the public-sector LIC, SBI and Central Bank of India.
"Why is the NDA/BJP government going overboard to bail out IL&FS?" he asked.
"The Prime Minister's Office and the Finance Ministry are putting pressure on the Reserve Bank of India, State Bank of India, LIC and NHAI to bail out this company and the logical question is why this is happening?" he said.
The government is trying "to help save foreign investors' money with the help of Indian tax-payers' money", he alleged.
"We demand that there should be a Supreme Court-monitored multi-agency investigation into all issues linked with IL&FS. This is a very serious issue," he said.
"The NDA-BJP government has brought India to the verge of an economic collapse and the manner in which the affairs of IL&FS fanned out is symptomatic of how this government has handled the Indian economy," he said.
According to the Congress leader, "some market analysis have been saying that this requires a very radical solution, it requires almost Satyam Computers like solution." "But, the problem here is that why did it come to this pass? Why is it, that now LIC is saying that we will increase our stake. It is not the money of LIC boards and it is not private money," he said.
He also took a swipe at the prime minister saying this matter of IL&FS is a clear case of "telephone banking that prime minister Modi was referring to when he recently talked about 'phone a loan' system during the Congress government", referring to political influence in grant of bank loans.
Referring to the prime minister's reference to 'videshi mahagathbandhan', he said, "This is that foreign alliance of the NDA-BJP government, where tax payers' good money is being used to save the foreign bad money".
He described the ILFS issue as a "crisis" in Indian economy and said the Finance Minister needs to answer what the government nominees in the company's board were doing.
"How did the debt of the company jump by 44 per cent in the last three years? The state of affairs in the ILFS is a symbol of the Government handling of the Indian economy," he said.
"This is bigger scam than Vijay Mallya, Nirav Modi, Mehul Choksi all rolled into one," he alleged.
The Congress leader said the company has an opaque corporate structure and its profitability has declined 900 per cent and it does not have sufficient reserves and surpluses to service its interest bearing loans and redeemable debentures and pay back its loans.
As of March 2018, LIC and Orix Corporation of Japan were the largest shareholders of IL&FS with 25.34 and 23.54 per cent respectively, while Abu Dhabi Investment Authority, HDFC, Central Bank of India and SBI hold 12.56 per cent, 9.02 per cent, 7.67 per cent and 6.42 per cent, respectively.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)