LIC channelled $3.9 billion toward Adani Group in govt-backed plan: Report

When Gautam Adani’s cash-strapped empire faced mounting debt earlier this year, help arrived not from wary global lenders but from a taxpayer-funded institution meant to secure the savings of ordinary Indians.

According to an investigation by The Washington Post (May 2025), senior officials in India’s Department of Financial Services (DFS) drafted a proposal in May to channel nearly $3.9 billion from the Life Insurance Corporation of India (LIC) — the country’s largest state-owned insurer — into Adani Group companies.

The plan, prepared in consultation with LIC and the government’s think tank NITI Aayog, listed among its strategic objectives “signaling confidence in Adani Group” and “encouraging participation from other investors”. It was subsequently approved by the finance ministry, two officials told The Post.

That confidence quickly translated into cash. In late May, Adani Ports and Special Economic Zone (APSEZ) launched a Rs 5,000-crore (roughly $585 million) bond issue to refinance existing debt. A single investor — LIC — bought the entire tranche, The Washington Post reported. The deal, carried out quietly, drew political fire for what Opposition leaders described as a bailout for a politically connected billionaire.

‘Premium yours, benefit Adani’s’

Lok Sabha Leader of Opposition Rahul Gandhi was among the first to seize on the revelation. “पैसा, पॉलिसी, प्रीमियम आपका — सुरक्षा, सुविधा, फायदा अडानी का!” he posted on X on 3 June — “Money, policy, premium are yours; security, convenience, and benefit are Adani’s!”.

As reported by National Herald (3 June, 2025), Gandhi accused Prime Minister Narendra Modi’s government of using citizens’ premiums to prop up its favoured corporate ally. “The common man pays; the crony benefits,” he said. The CPI(M) and other opposition parties echoed his charge, calling the LIC–Adani deal a “misuse of public funds” and an emblem of state-sponsored crony capitalism.

For critics, Gandhi’s slogan crystallised a larger unease: that public institutions once designed to protect ordinary investors are increasingly being used to stabilise the fortunes of India’s most powerful tycoon — a man whose political ties date back more than two decades.

A billionaire and his ally

The Washington Post traces Adani’s relationship with Modi back to the early 1990s, when the businessman transformed a derelict salt flat in Gujarat into the bustling Mundra Port. Modi, then a rising organiser in the BJP, took notice. When he ran for prime minister in 2014, he travelled between campaign stops aboard an Adani Group jet.

Over the next decade, Adani’s companies became central to Modi’s development agenda — building ports, power plants, airports, cement factories and renewable-energy farms. Today, Adani Group handles roughly a quarter of India’s cargo and dominates private-sector power generation.

The two men’s fortunes, The Post notes, have become symbolically intertwined: Modi’s promise of infrastructure-driven growth is inseparable from Adani’s corporate expansion.

“This government supports Adani and will not allow any harm to come to it,” said Mumbai-based analyst Hemindra Hazari, who told The Post that LIC’s investment signalled clear state patronage.

Legal clouds abroad

The Washington Post investigation also highlights that the government’s quiet backing came even as Adani faced legal turmoil overseas. In 2024, the US Department of Justice charged Gautam Adani, his nephew Sagar Adani and six associates with a multi-billion-dollar fraud and bribery scheme, alleging they lied to investors and paid more than $250 million in bribes to win solar-energy contracts in India. The Securities and Exchange Commission (SEC) filed parallel civil charges the same day.

Adani Group denied all wrongdoing, telling The Post that the cases concern “individuals, not our companies,” and insisting that “our growth predates Mr Modi’s leadership.”

The US indictments, The Post reported, rattled lenders worldwide. Three Indian bankers told the paper that US and European banks hesitated to extend new credit, forcing Adani to rely more heavily on domestic sources — notably the state insurer.

At home, India’s Securities and Exchange Board of India (SEBI) is still investigating allegations raised in the 2023 Hindenburg Research report, which accused Adani Group of stock manipulation and accounting irregularities. Although SEBI has dismissed some charges, others remain open.

The DFS documents cited by The Washington Post acknowledged that Adani’s securities were “sensitive to controversies” and that LIC had lost roughly $5.6 billion in paper value on its Adani holdings after the Hindenburg episode. Even so, officials concluded that more investment would “align with LIC’s mandate” and India’s “economic objectives”.

The case for confidence

According to The Washington Post, government analysts argued that Adani’s corporate bonds offered better yields — between 7.5 and 8.2 percent — than 10-year government securities at 7.2 percent. They recommended LIC invest about $3.4 billion in Adani Group bonds and another $507 million to increase its stakes in Adani Green Energy and Ambuja Cements.

For the government, the infusion was meant not only to ease Adani’s refinancing burden but also to reassure markets after foreign investors fled. For opponents, it was public money underwriting private risk. “This is abnormal behaviour for an insurer whose mandate is to protect the poor and rural policyholder,” Hazari told The Post. “If anything happens to LIC, it’s the taxpayer who will have to bail it out.”

Transparency International’s Kush Amin told The Post the plan showed that Adani “operates under a different set of rules” because of his proximity to power.

Adani’s defence and official silence

In its written response to The Washington Post, Adani Group rejected claims of government-orchestrated support: “LIC invests across multiple corporate groups — suggesting preferential treatment for Adani is misleading. Moreover, LIC has earned returns from its exposure to our portfolio.”

LIC, the DFS and the Prime Minister’s Office declined to comment to The Post.

The insurer’s defenders argue that Adani’s projects — from renewable power to ports and logistics — are vital to India’s infrastructure expansion and therefore a logical long-term investment.

But, as The Post reported, the optics have been damaging: a debt-laden conglomerate under US investigation buoyed by India’s oldest public insurer has revived questions about governance, transparency and the fusion of political and corporate power.

A blurred boundary

For now, the LIC funding has helped Adani weather a tightening global credit market and preserve control over prized assets. Yet, as Rahul Gandhi’s refrain — “premium yours, benefit Adani’s” — continues to echo, the episode encapsulates a deeper tension in India’s growth story: between the state’s developmental ambitions and the risks of entwining public money with private empires.

The government insists it is betting on India’s future. Its critics, quoting The Washington Post’s findings, counter that it is mortgaging that future to protect one man’s fortunes.