FINANCE minister Nirmala Sitharaman has announced during her second budget speech on February 1 that the government will list LIC in the stock exchange and sell part of its stake via Initial Public Offer (IPO). In justification of her proposal she said, “Listing of companies on stock exchanges disciplines a company and provides access to financial markets and unlocks its value. It also gives opportunity for retail investors to participate in the wealth so created. The government now proposes to sell a part of its holding in LIC by way of Initial Public Offer (IPO).” The hired pen pushers of the government have gone gung-ho after this announcement. It is being claimed that listing of LIC will be of immense help to the policy holders; it will allow analysts to monitor LIC’s governance; LIC will come under the Securities and Exchange Board of India (SEBI)’s direct watch and strengthen corporate governance.

LIC IS THE GOLDEN GOOSE
Listing of LIC will amount to wanton destruction of the premier public sector financial institution in the country. The LIC mobilises small savings of the people and makes them available for national development. Since its inception in the year 1956, the LIC has earned the trust and goodwill of millions of Indians and has crossed many milestones. The LIC has set unprecedented performance records in various aspects of life insurance business. Commencing its operations with a paltry sum of Rs 5 crore in the year 1956, the LIC today commands over an astronomically huge asset base of over Rs 31 lakh crore. The total Life Fund of the LIC as on March 31, 2019 was Rs 28.28 lakh crore. Even after over two decades of competition in the life insurance business, the LIC stands tall with a market share of more than 73 per cent. The LIC has the proud distinction of contributing more than 25 per cent to the total budgetary efforts of the government of India. The LIC has recently paid a dividend of Rs 2,611 crore for the year 2018-19 to the government of India against an equity of Rs 100 crore. It is pertinent to mention here that the total dividend paid by LIC till date since its inception is a huge Rs 26,005.38 crore. The contribution of LIC to independent India’s planned development process and its investments in the social sectors of the economy have simply been phenomenal. Selling part of LIC’s stake to private interests and its disinvestment would be a surest blow to the resource mobilisation efforts of India. At a time when the government is faced with a severe resource crunch because of dwindling tax revenue collections, selling part of government equity in LIC would be akin to killing the golden goose that lays golden eggs.

CORPORATE GOVERNANCE IN LIC
BETTER THAN ANY PRIVATE COMPANY
The apologists of neoliberalism have been egging on the government to unlock the enormous value of LIC by privatising it. The penchant of the finance minister ‘to unlock value’ by way of LIC’s listing is therefore understandable. What is strange, however, is that the government is worried about unlocking value for the corporates rather than for the people. The ruling classes in India today forget the fact LIC was created through an act of parliament to offer protection to the insuring public from the enormous loot and fraud committed by the private insurance companies. The decision to sell a part of government equity to those very forces who were primarily responsible for the loot in the private companies is something astounding.

In spite of all the protestations to the contrary, LIC today is much better governed than any private insurance company. If one were to compare the operating expenses of the LIC with that of the private insurance companies, it is interesting to note that according to the IRDA Report 2018-19 the total operating expenses of LIC decreased by 3.19 per cent while that of the private companies increased by 17.5 per cent.  The servicing standards set by the LIC are better than any other company in the industry. As can be seen from the IRDA Report of 2018-19, the LIC repudiated 0.43 per cent of the claims from individual business and 0.02 per cent of claims from group insurance business. The private companies, on the other hand, repudiated 2.83 per cent of claims from individual business and 0.44 per cent from the group business. The total investments of LIC as on March 31, 2019 is of the order of Rs 29.84 lakh crore. It is worth mentioning here that 82 per cent of the investments of LIC are in central, state government securities and other approved securities. The annual surplus available for investments for LIC ranges from Rs 3.5-4.5 lakh crore. No private company would ever come forward to make available funds for social and infrastructural development of this huge magnitude.

FINANCIAL DISCIPLINE
AND THE HOAX OF NPAs
A motivated campaign is underway to defame and malign LIC by saying that it is sitting over an unacceptably high level of NPAs. More often than not, the campaign gets virulent when LIC makes some investments in a public sector undertaking. It is argued that the government is forcing LIC to pump enormous resources in ailing public sector banks endangering the policy monies and interests of policy holders. This is nothing but blowing things out of proportions. It is an open secret that most of the banks have problems in their balance sheets because of problems in infrastructure financing, especially due to problems in the energy sector. But LIC does not have much of a problem since most of LIC’s investments in the infrastructure sector have been made through consortium and the consortium partners are working on the recovery process. LIC has also made adequate provisions and efforts are on to recover the bad debts. It is to be noted that LIC’s net non-performing assets (NPA) ratio stood at 1 per cent for the last fiscal. While the corporate media is desperate to paint a bleak  future of the LIC on the question of NPAs, it must be noted that these NPAs account for only 0.80 per cent of LIC’s huge asset base of Rs 31 lakh crore. The shrill cries about bringing in financial discipline in LIC are nothing but a hoax to defame it and eventually privatise it.

REAL REASONS
BEHIND LISTING
The NDA government at the centre is ideologically opposed to the concept of public sector. The government subscribes to the neoliberal orthodoxy that “it is not the business of governments to be in business”. The severe crisis in the Indian economy today has come in handy for the government to implement its pet ideological project. A severe resource crunch is staring at the government right in its face. Direct tax collections are at the lowest ebb in the last four decades. Indirect tax collections have been woefully inadequate, thanks to the tardy implementation of the Goods and Services Tax (GST). The government says that it needs Rs 100 lakh crore worth of investments in the next five years. But the million dollar question is where from this money will come? The union budget has therefore set an ambitious target of Rs 2.10 lakh crore from disinvestment of public sector undertakings. The government hopes to mop up around Rs 70,000 crore by way of partial disinvestment of LIC. At present, the government owns 100 per cent stake in LIC. Since LIC is governed by an act of parliament, the LIC Act 1956, the government will have to amend this act and change the capital structure of the corporation before the IPO process gets underway.

Insurance employees under the banner of the All India Insurance Employees’ Association (AIIEA) are opposed to this ill conceived move of the government. Public sector is the property of the people. The rulers therefore have no right to sell it. Insurance employees all over India held massive protest demonstrations immediately after the announcement was made in the budget. Subsequently, employees, officers and development officers under the banner of Joint Front have gone on walk out strike on February 4, 2020. The AIIEA will try to enlist the support of the entire insurance fraternity including agents as also the democratic and patriotic sections of Indian people to defeat this nefarious move of the government.