Sanjay Singh Revives ₹3.53 Lakh Crore ‘Haircut’ Charge Against Modi Government, Questions Corporate Debt Resolutions
A fresh political attack by Aam Aadmi Party (AAP) Rajya Sabha MP Sanjay Singh has brought a long-running controversy over large corporate loan recoveries back into focus. On August 30, 2026, Singh alleged that corporate houses had benefited enormously from debt resolutions under the Narendra Modi government and claimed that ordinary depositors ultimately bore the burden of the losses.
Singh’s central allegation is based on figures he has previously presented in Parliament. According to the AAP leader, 43 companies had outstanding dues of ₹5,44,434 crore, against which only ₹1,90,779 crore was recovered. He therefore described ₹3,53,655 crore as the amount effectively sacrificed through what he calls the government’s “haircut” mechanism.
The political significance of the allegation is considerable because these figures concern some of the country’s most prominent corporate insolvency cases. Singh has cited companies including DHFL, Bhushan Power & Steel, Bhushan Steel, Lanco Thermal Power, Reliance Infratel, Alok Industries and Essar Steel among the cases in his compilation.
Singh has repeatedly argued that the word “haircut” makes substantial debt reductions sound routine or technical. In his political framing, however, the issue represents a transfer of financial losses from large borrowers to banks and ultimately to the wider financial system. He has contrasted these cases with the treatment of smaller borrowers, farmers, students and street vendors.
One of the largest examples cited by Singh is Dewan Housing Finance Corporation Ltd. (DHFL). His figures put the outstanding amount at ₹87,083 crore, with ₹37,161 crore recovered and ₹49,922 crore not recovered under the resolution cited by him. Reliance Infratel is another major example in his list, with ₹41,055 crore shown as outstanding and ₹4,236 crore as recovered.
Lanco Thermal Power is cited as an even more striking case. Singh’s figures show ₹33,331 crore in outstanding debt against only ₹136 crore recovered, leaving ₹33,195 crore as the claimed haircut. Alok Industries is listed with ₹29,524 crore outstanding, ₹5,052 crore recovered and ₹24,472 crore not recovered.
Bhushan Power & Steel, according to the same figures, had ₹47,158 crore in outstanding debt, of which ₹19,350 crore was recovered and ₹27,808 crore was not recovered. Bhushan Steel had ₹56,022 crore outstanding, with ₹35,571 crore recovered and ₹20,451 crore representing the claimed reduction.
Singh has also highlighted the case of Subhash Chandra in his latest attack. He claimed that against approximately ₹22,000 crore of debt, only ₹6.5 crore was recovered, characterising the remaining amount as a 99.97% waiver. The AAP leader used the example to argue that the insolvency process can produce extraordinarily large reductions in creditors’ claims.
There is, however, an important distinction in understanding these figures. A “haircut” in an insolvency resolution is not automatically the same thing as the Union government directly waiving a company’s loan. Under India’s Insolvency and Bankruptcy Code framework, creditors can approve a resolution plan in which they accept less than the admitted claims. Insolvency adjudication records themselves describe such reductions as haircuts taken by financial creditors.
The National Company Law Tribunal and insolvency framework therefore play a crucial role in determining how much creditors ultimately recover from distressed companies. In one NCLT matter, for example, an admitted claim of ₹48.36 crore resulted in an allocation of ₹4.01 crore, which the tribunal described as approximately a 92% haircut.
The broader economic question is whether accepting such haircuts destroys value or, alternatively, prevents an even larger loss that could occur if a company is liquidated. India’s Economic Survey 2025-26 noted that creditors recovered ₹3.99 lakh crore through 1,300 resolution-plan outcomes closed up to September 2025. It also said recoveries represented about 94% of the fair value of resolved businesses and 170% of what creditors would have received through liquidation.
That distinction is at the heart of the political dispute. Singh presents the unrecovered portion of corporate debt as money effectively sacrificed for powerful borrowers. The government’s broader insolvency framework, by contrast, treats negotiated recovery through resolution as a mechanism for rescuing viable businesses and maximising creditor recovery compared with liquidation.
Singh’s argument is nevertheless politically potent because the banking system is heavily connected to ordinary citizens. Deposits from households and businesses form a major source of bank funding, while public-sector banks have historically carried significant exposure to large corporate borrowers. The AAP leader argues that when banks ultimately recognise losses on such loans, the consequences cannot simply be viewed as a private arrangement between a company and its lenders.
His criticism also draws on the sharp contrast between the treatment of large corporate insolvencies and the financial difficulties faced by ordinary borrowers. Singh has argued that when small borrowers fall behind on EMIs, they can face recovery pressure, while large corporate borrowers can enter a legally structured insolvency process in which creditors accept substantial reductions.
The issue has been part of Singh’s political campaign against the Modi government for several years. In August 2024, he raised the ₹5,44,434-crore figure in the Rajya Sabha and argued that ₹3,53,655 crore had been waived under the “haircut” mechanism. He said the government should explain why such large reductions were being accepted in corporate cases.
The controversy is therefore less about whether large haircuts have occurred in Indian insolvency proceedings—they clearly have—and more about how those haircuts should be interpreted. AAP describes them as evidence of preferential treatment for corporate borrowers, while the insolvency framework treats creditor-approved reductions as part of the process of resolving financially distressed companies.
Singh’s latest intervention ensures that the question will remain politically charged: when a company owes thousands of crores and creditors recover only a fraction, who ultimately bears the economic cost—the banks, their depositors, shareholders, taxpayers, or the wider financial system? The answer depends on the individual resolution, the identity of the creditors, subsequent recoveries and the difference between a legally approved insolvency haircut and a direct government loan waiver.
