The attempts being made for the last 30 years to privatise the Life Insurance Corporation (LIC) of India will fail once again, All India Insurance Employees’ Association (AIIEA) general secretary Shreekant Mishra has said.
“It is not being opposed from an ideological standpoint, but due to the fear of the likely impact of the strategic disinvestment of the Central government’s stake on the policyholders and the overall economy,” Mr. Mishra says.
“The Centre considers privatisation of LIC as a safe bet only to wriggle out of the economic crisis by tapping the insurance giant’s massive pile of cash that runs into ₹38 lakh crore,” he argues.
Mr. Mishra was speaking to The Hindu on the sidelines of the South Central Zone Insurance Employees’ Federation’s 12th zonal conference here on Sunday. AIIEA president V. Ramesh was present.
“In a bid to privatise the LIC, the Centre has incorporated the amendments required to be made to the Life Insurance Corporation Act, 1956, in the Finance Bill. The valuation of LIC by an American firm is under way. The IPO is most likely to hit the capital markets in the last quarter of FY 2021-22. Against this backdrop, we have mobilised the support of political formations, which are normally friendly to the government, the policyholders and the general public. With this, the Centre will eventually drop the idea of selling LIC,” Mr. Mishra observed.
He said that some early proponents of privatisation of LIC were now convinced that retaining it in the public sector was in the interest of all. “Particularly, the policyholders still rate it (the LIC) as the best in class with an impeccable record in claim settlement,” Mr. Mishra said.
“The inbuilt strength of LIC is going to make it very tough for the Centre to offload its stake. Then the markets should have the kind of appetite to absorb even as little as 10% of the shares that may be put up for sale initially, given the country’s economic woes,” he pointed out.
“An insurance product is basically a promise, and the ‘sale of a promise’ is better backed by governments rather than private companies, as it involves a huge amount of public money that ought to be in the public domain,” Mr. Mishra reasoned.
Coming to the sale of its stake in the general insurance companies, the government appeared to be not sure of the repercussions of privatisation, while the employees’ demand was that they (the United India Insurance, the Oriental Insurance Company and National Insurance) should be merged like some PSU banks were consolidated. “But, there is apparently a doublespeak on this count,” he added.