Disinvestment in LIC go against Atmanirbhar Bharat: LIC employees federation
LIC has always been at the service of the people and the nation and attempts to disinvest LIC will change the Corporation’s motive from service to profit making
The All India LIC Employees Federation (AILEF) has expressed its concern over the Modi government’s plan to list the country’s largest life insurer, Life Insurance Corporation of India.
The government has set in motion the proposal for disinvestment in LIC. The Department of Investment and Public Asset Management (DIPAM) has invited bids from consulting firms, investment bankers and financial institution to advise the government on the preparatory processes of the proposed IPO.
The government will be engaging two pre-IPO transaction advisors for the largest public offer in the country till now. The last date for bids for advisors to LIC’s IPO is July 13, as per the request for proposal, whereas the bids will be opened on July 14.
“The Federation has not only drawn the government’s attention to the matter, but it has also sought the government’s intervention to immediately stop the disinvestment process in LIC, one of the jewels in the crown of India as it is against the much emphasised mission of Atmanirbhar Bharat. Disinvestment in LIC will be a stepping stone for privatisation in future which will be against national interest,” says AILEF’s general secretary Rajesh Kumar.
Since its inception in 1956, LIC has been spearheading the spread of life insurance to the vast majority of the populace and in particular in the rural areas and to the socially and economically backward classes with a view to reach all insurable persons in the country and providing them adequate financial cover against death at a reasonable cost. True to the objective of nationalisation, the Corporation has mobilised funds invested by the people in the life insurance for the benefit of the country. National priorities and obligation of reasonable returns to the policyholders have been the main criteria of LIC’s investment. The total funds, so invested for the benefits of the community, are Rs 29,84,331 crore as on March 31, 2019.
If the government goes ahead with its plan of disinvestment in LIC, there obviously will be implication for policyholders.
As per the Sec 28 of LIC Act, 1956, policyholders are eligible for not less than 95% of the surplus emerging under both participating and non-participating policies. The proposed public offer through disinvestment in LIC will change the way surplus is distributed. Higher share of surplus to shareholders will affect the rate of bonus to policyholders and this in turn will affect future new businesses.
Listing of LIC will also change LIC’s operational approach and investment policies. Way back on January 19, 1956, when the then Union Finance Minister, C. D. Deshmukh took the decision of establishing LIC, the prime objective was to mobilise money for infrastructure development, protecting the policyholders’ interest and at the same time spreading life insurance at a low cost to the common man.
LIC has always been at the service of the people and the nation and attempts to disinvest LIC will change the Corporation’s motive from service to profit making. The aim will be to maximise returns to its shareholders. This will also discourage LIC from providing insurance cover to the underprivileged section of the society. In order to survive cut-throat competition, LIC may be pushed to review its investments in social sectors like housing, power, irrigation, water supply, sewerage, roads, ports, bridges, railways and other infrastructure, says the statement from Federation.
“LIC's slogan ‘Yogakshemam Vahamyaham’ which means ‘Your welfare is our responsibility’ will certainly be defeated. Therefore, we fervently appeal to you to rescind the decision of disinvesting in LIC in national interest which will give a big boost to make India Aatmanirbhar,” adds the statement.
Published: 26 Jun 2020, 9:00 PM