Sunday, February 28, 2016

LIC – By the government for the Government

It’s not a crime to save government from a crisis or embarrassment. LIC did exactly the same for a very lengthy period. The question to be asked here is, whether it’s right to use LIC to escape from every embarrassment of otherwise failed disinvestment drives.

Look at the data; over 60% of last NTPC stake sale was subscribed by LIC. After this LIC’s stake in NTPC was increased by 3.9% to 12.98%. Same thing happened with previous stake sales as well - IDBI, IOC etc. List is long. 

LIC holds 21.22% share in Corporation Bank, 16.8% in MTNL, 14.36 in UCO Bank, 14.31% in BHEL, 14.13% in Shipping Corporation; 13.75% in Canara Bank so on and so forth.

Is this disinvestment? Government is selling shares of PSUs and another arm (read LIC) is buying most of it. How long we can live in this false perception that disinvestment is a success? This has to be changed.

This year, LIC invested 53,000 crore rupees for equity purchases compared to last year’s 39,000 crore. In 2014–15 LIC booked an all-time high profit of 24,000 Crore. I really don’t know what is happening here. If equity purchases of PSUs are so profitable then why others are not doing it in such a great scale. Can anyone enlighten me?


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