The recent data from “The Great Haircut Story” exposes a troubling pattern of massive loan write-offs and financial losses in India’s banking sector, with a total loan amount of Rs. 4,46,800 crores across 13 accounts settled for just Rs. 1,61,820 crores, resulting in a staggering 64% haircut and a loss of Rs. 2,84,980 crores to the banks.
This significant erosion of public funds, intended for the welfare of the people, has disproportionately benefited private corporate entities and influential groups such as Arcelor Mittal, Tata, Reliance, and Vedanta, while leaving taxpayers to bear the burden. Cases like Essar (23% haircut), Bhushan Steels (38%), and Videocon (94%) illustrate how substantial debts have been forgiven, often with minimal recovery efforts, raising serious questions about accountability and governance under the BJP Modi Government.
Delving deeper into the issue, evidence from various sources suggests that the scale of loan write-offs under the Modi administration has reached alarming proportions, with estimates ranging from Rs. 10 lakh crores to Rs. 16.11 lakh crores over the past decade. Critics, including opposition leaders like Rahul Gandhi and Mallikarjun Kharge, have accused the government of facilitating a “reverse Robin Hood” policy, where the middle class is heavily taxed while corporate defaulters—allegedly close to the ruling party—receive waivers and escape consequences.
The All India Bank Employees’ Association (AIBEA) has highlighted specific instances where banks took a 64% haircut on Rs. 4.47 lakh crores in insolvency proceedings, underscoring a systemic failure to protect public money. Moreover, the push for bank privatization, as noted in the image, is seen by many as a move to further erode public sector banks, which have borne the brunt of these losses.
A particularly egregious aspect of this financial mismanagement is the flight of high-profile defaulters to foreign soil with billions of rupees, often with apparent ease. Notable cases include:
Vijay Mallya: The liquor baron, who owed approximately Rs. 9,000 crores to a consortium of banks, fled to the United Kingdom in March 2016. His company, Kingfisher Airlines, defaulted on loans after years of financial mismanagement, and despite an extradition request, Mallya has remained in the UK, living a lavish lifestyle while legal battles drag on.
Nirav Modi: Accused in the Punjab National Bank (PNB) fraud of Rs. 11,450 crores, Nirav Modi left India in early 2018 just before the scam was uncovered. He has since been detained in the UK pending extradition, but the recovery of funds remains minimal. His company allegedly used fraudulent Letters of Undertaking (LoUs) to siphon money, with investigations suggesting complicity or negligence by bank officials.
Mehul Choksi: Nirav Modi’s uncle and co-accused in the PNB scam, Choksi fled to Antigua in 2018, owing around Rs. 7,000 crores. He acquired citizenship there and has resisted extradition, with his case mired in legal disputes. The speed of his departure and the scale of the fraud point to a failure in oversight.
Nilesh Parekh: A Kolkata-based jeweler, Parekh was involved in a Rs. 22.23 billion fraud across 20 banks. Arrested by the CBI in 2017, he allegedly diverted funds through shell companies in Singapore, Hong Kong, and the UAE, with some reports suggesting he managed to relocate assets abroad before legal action was fully enforced.
These cases highlight a pattern where defaulters, often linked to politically connected businesses, have exploited loopholes to flee with public money. The Modi government’s critics argue that the lack of stringent preemptive measures—such as freezing assets or expediting extradition—reflects either incompetence or complicity.
The introduction of laws like the Fugitive Economic Offenders Act (2018) and the Benami Transactions Act has been touted as a response, but the recovery rate remains dismal, with only a fraction of the Rs. 82,571 crores recovered out of the Rs. 7.94 lakh crores written off between 2015 and 2019, according to some analyses.
The BJP Modi Government faces a severe belt treatment for this debacle. The administration’s economic policies appear to have prioritized corporate interests over public welfare, enabling a culture where defaulters can abscond with impunity. The expenditure of Rs. 4,100 crores on the G-20 summit, as noted by Sitaram Yechury, contrasts starkly with the neglect of public sector units like the Visakhapatnam Steel Plant, while loan waivers for billionaires dwarf the Rs. 60,000 crores farm loan waiver of 2008.
The push for bank privatization, amid such losses, is seen as a move to hand over weakened public assets to private players, potentially deepening the crisis. This government’s failure to safeguard the nation’s financial integrity, coupled with the flight of economic offenders, paints a picture of systemic corruption and negligence, demanding urgent accountability and a reversal of its privatization agenda to protect the people’s money from further corporate loot.
Should the Congress come to power, it pledges to launch a thorough investigation into this monumental BJP scam at the highest level. A special task force, comprising independent financial experts and legal authorities, will be established to probe the nexus between corporate defaulters, bank officials, and political figures, ensuring the recovery of misappropriated funds. Extradition efforts will be aggressively pursued, and stringent laws will be enacted to prevent future financial flights, holding the guilty accountable and restoring public trust in the banking system for the welfare of the people.
~ Rajesh Kumar Sethi