All India Insurance Employees Association (AIIEA) has expressed opposition to the Union government’s decision to sell a part of its holding in LIC. The government announced in the Union Budget for 2020-21 its plans to sell a part of its holding in LIC through an Initial Public Offer (IPO).
Now, the government is going ahead with its decision to privatise LIC by inviting bids to appoint a Pre-Transaction Advisor. This company will assist the government in the process related to the IPO. This is condemnable, association members said at an event in Dharwad on Wednesday.
At the programme organised to mark the 70th Foundation Day of AIIEA, association leaders said that this was being done despite opposition from the entire workforce of LIC, the trade union movements and right thinking people of this country. It is unfortunate, they said.
Leaders said that the workforce of LIC which has made enormous contribution to create the finest financial institution are disappointed and disturbed by this government move. LIC was started with a meagre capital base of ₹ 5 crore in 1956. It has been managing assets in excess of ₹ 32 lakh crore today. The demand of the AIIEA, which was formed on July 1, 1951, has been nationalisation of insurance business in the country.
The objectives of nationalisation of life insurance business by taking over 245 private insurers were to mobilise small savings and convert them into capital for long-term investment in infrastructure, while, at the same time, giving total security to policyholders and ensuring decent returns, they said.
The equity sale by the government which may ultimately lead to privatisation kills these very objectives. The concept of “people’s money for people’s welfare” will give way to maximisation of profits for shareholders. This is not in the interests of LIC’s 40 crore policyholders or the national economy, they said.
It is widely acknowledged that domestic savings play a very important role in the national economy and many economists world-wide hold the view that foreign capital is a poor substitute for domestic savings. In a situation where the country needs huge resources for development, it is necessary that the government exercised control over domestic and, more importantly, household savings, they said.
Prime Minister Narendra Modi has called for an Atmanirbhar Bharat and this vision can be successful only when an institution which every year generates enormous surplus that can be invested remained totally under government control, they said.
“We would like to stress again that the move to sell equity of LIC will severely impact the economy and vulnerable sections of people. The social objective of providing insurance cover to the weaker sections of society will suffer a set-back. The aim to expand insurance in unprofitable rural areas too will suffer. Therefore, disturbing the character of LIC will harm the interests of the national economy and the poorer sections of the population,” they added.
Under the circumstances, “we urge the government to withdraw the invitation of bids for appointing Pre-Transaction Advisor for LIC’s IPO and reconsider the decision on disinvestment in LIC,” they said.
