IL&FS crisis threatens to rob the savings of workers and soldiers

The crisis of Infrastructure Leasing & Financial Services (IL&FS), one of the largest non-bank financial institutions in our country, is having a huge negative impact on the retirement funds of lakhs of workers and soldiers.

IL&FS is a company whose main business has been to raise money from various sources, including pension funds and provident funds, to finance large infrastructure projects. It is owned jointly by several financial institutions, headed by the Life Insurance Corporation (LIC) of India, Abu Dhabi Investment Authority (ADIA) and the Japan-based Orix group. Starting in September 2018, it started defaulting on servicing its massive outstanding loans, amounting to more than Rs. 94,000 crore.

Following the loan default, IL&FS has been brought under a new state-appointed management team. A rescue operation is being implemented, which involves writing off a big part of the outstanding debt of this group of companies.

Provident fund and pension fund trusts have collectively invested thousands of crores of rupees in bonds of the IL&FS group. These bonds had been promoted by credit rating agencies as “low risk”, thereby encouraging the managers of pension and provident funds to invest in them. Following the crisis and the government’s rescue measures, what was promoted as low risk has suddenly become highly risky.

The loans taken by IL&FS from commercial banks are generally against the security of productive assets. However, this is not the case when it comes to bonds of the company held by pension and provident funds. They are “unsecured” liabilities. The risk of loss is much greater for those holding unsecured bonds.

So far, over 50 funds, managing retirement benefits of over 14 lakh employees, are reported to have invested in IL&FS bonds. They include employees of public sector companies such as MMTC, Indian Oil, CIDCO, HUDCO, IDBI, SBI and the state electricity boards of Gujarat and Himachal Pradesh. They even include several army soldiers’ retirement funds.

The hard-earned savings of lakhs of workers and soldiers are now under threat of being wiped out. Several workers’ unions and federations of unions have filed cases with the National Company Law Tribunal for recovering their dues from IL&FS.

Institutions that borrow and lend money are an essential element in any society whose material needs are bought and sold in the market. The problem with capitalist countries at this time is that financial institutions driven by the motive of maximising their own profits have reached gigantic scales. They gamble with people’s savings. When they are unable to service their debt, the government intervenes to shift the burden of the crisis on to the backs of the people who have deposited their savings with such institutions.

Instead of being institutions in the service of society, both banks and non-bank financial institutions are acting as instruments to rob the working people.

Tag:   

Share Everywhere

Mar 16-31 2019    Political-Economy    Economy     War & Peace     2019   

पार्टी के दस्तावेज

Click to Download PDFInterview with Comrade Lal Singh, General Secretary of Communist Ghadar Party of India

by Comrade Chandra Bhan, Editor of Mazdoor Ekta Lehar

(Click thumbnail to download PDF)

History of Ghadar PartyA Presentation of Communist Ghadar Party of India

100 years ago Ghadar Party was formed by Indians in the US.It was historic milestone in our anti-colonial struggle.

The goal of this party was to organise a revolution to liberate our motherland from British servitude and establish a free and independent India with equal rights for all. It believed this to be the necessary condition for our people to hold their heads high anywhere in the world.

(Click thumbnail to download PDF)

Call of the Central Committee of Communist Ghadar Party of India, 30th August, 2012

Working class representatives from all over the country are gathering on 4th September, at a time when a titanic struggle is going on in our country. The struggle is between the majority of toiling and exploited people and a minority of exploiters. It is between the majority whose labour expands wealth and the minority who enjoy the fruits of wealth creation on the basis of their private property and positions of power.

(Click thumbnail to download PDF)

Call to the Working ClassDefeat the program of privatisation and liberalisation!

Fight with the aim of establishing workers’ and peasants’ rule!

Call of the Central Committee, Communist Ghadar Party, 23 February, 2012

(Click thumbnail to download PDF)

Necessity for the working class to take political powerThe initiating speech, at the working class conference on the Way Forward held on 23-24 December 2011, was made by comrade Lal Singh, on behalf of the Central Committee of the Communist Ghadar Party of India. The document entitled the necessity for the working class to take political power has been edited based on the discussion in the conference and is being published according to the decision the Central Committee.

(Click thumbnail to download PDF)

Power to DecideVoice of the Communist Ghadar Party of India on the Power to Decide

This publication contains three statements issued by the Central Committee of Communist Ghadar Party on 1st, 18th & 28th Aug, 2011.

(Click thumbnail to download PDF)