'Not legal': Social activists oppose LIC IPO

Even as stakeholders burn the midnight oil to get LIC listed on the bourses within this fiscal year, a group of the former top brass of bank unions and a bureaucrat have come out against it.

They argue that the government has bypassed several important rules to get the insurance behemoth listed for the sake of meeting its disinvestment target, disregarding the social cause that LIC serves for the marginalised section.

“They play the role of the instrumentality of the state and so we find the public sector undertakings being sold.. prima facie it is not legal and also unconstitutional”, said EAS Sarma, former secretary, ministry of power & economic affairs.

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According to Bloomberg, India is pushing to raise $10 billion from the state-owned insurer and is expected to be the nation’s biggest IPO with a minimum dilution of 5% with a valuation of about $203 billion.

The group called “People’s Commission on Public Sector and Public Services” added that non-transparent valuation, harmful structural change and alteration in profit distribution post listing would prove to be detrimental for the brand value that LIC carries.

The grouping drew attention to the stark difference in the average premium of a policy sold by LIC as compared to other private players in the space. “For the year 2020-21, the average premium of a policy (referred to as “ticket size”) sold by LIC was Rs.16,000 while for the private sector it is Rs 90,000”, said senior journalist V Sridhar.

It termed the disinvestment as highly imprudent as it would result in a radical change in the role and character of the corporation as the largest social security provider in India for the disadvantaged sections of the society.

Also Read | LIC posts profit after tax of Rs 1,437 cr during Apr-Sept

“We have reached out to about 500 members of the Parliament from across party lines and unfortunately we get the same stock reply saying that they agree with the fact that LIC is too important to be privatised but ultimately have to go by the whip issued by their respective parties”, said Amanulla Khan, former president, All India Insurance Employees Association.

The grouping expressed concern about the recently amended LIC Act, which reduced the profit share of the policyholders from 95% to 90%, saying that it will eventually benefit a handful of affluent investors and will run counter to the public interest.

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