Adani stocks continue to take a beating as a consequence of the Hindenberg report on its operations. It is reported that the losses in the falling stock are near USD120 billion, wiping out a substantial valuations of the companies. The surprising part of this story is that despite this massive impact, the Finance Secretary has described this whitewash as a ‘storm in a tea cup’ and that it will subside in a few days.
On what basis he is saying this is not understandable and which crystal ball he is looking into to make his prediction. Maybe he is saying this because in a short time Adani will have nothing more to lose! However, the lack of concern from the Finance Secretary is stunning since government entities like LIC and SBI are exposed to the extent of Rs 56,000 crores in the Adani Group Cos. The government and IRDAI have put out statements that the exposure of LIC and SBI are within the norms and are only to the extent of some 0.2% of their total loan portfolios.
The issue is not that but the risk of the government losing this money which is a substantial amount of public funds. We have seen how from Mallya to Choksi to Nirav Modi the government has failed to recover their investments since the pledged assets never compensate fully to the extent of loans taken and the process of recovery is cumbersome and time consuming.
