Special Correspondent

`Government creating a paradoxical situation'

Srikakulam: The Life Insurance Corporation (LIC) of India would mobilise $150 billion in the next five years if more autonomy was granted and the Government desisted from taking steps that weaken it, said V. Ramesh, general secretary, South Central Zone Insurance Employees' Federation.

Speaking to newsmen at the local LIC office here on Friday, Mr. Ramesh asserted that the proposed comprehensive insurance legislation announced by Finance Minister Chidambaram would weaken the LIC. The proposed reforms and opening of insurance to global players, according to pro-reformers, would ensure flow of funds to the country to the tune of $150 billion. "But we do not accept this," Mr. Ramesh asserted pointing that the FDI (Foreign Direct Investment) in the insurance sector since 1999 was $600 million.

It was paradoxical that on one side the Government wanted to open up the insurance sector to global players because it would help FDI, on the other it was initiating steps that would result in flight of funds to foreign countries, he said.

Mr. Ramesh alleged that the reforms were being initiated at the instance of powerful international financial institutions. There were sections that were hell-bent on weakening the LIC.