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Congress questions Modi govt's 'intent' behind LIC IPO amid 'volatile market'

Surjewala accused the government of breaching the trust and confidence of 30 crore LIC policy holders by undervaluing the insurance behemoth
Last Updated 03 May 2022, 09:53 IST

Congress on Tuesday questioned the “haste” and "intent" with which the Narendra Modi government is going ahead with the Initial Public Offering of Life Insurance Corporation (LIC) at a time the market conditions are not favourable and the decision to decrease its valuation and issue size.

Party’s chief spokesperson Randeep Surjewala accused the government of breaching the trust and confidence of 30 crore LIC policy holders by undervaluing the insurance behemoth.

“The ‘intent’, ‘purpose’ and ‘modus operandi’ of the government’s desperation to launch the IPO despite lower valuations, omission to take into account ‘key valuation indices’, ‘global uncertainties’ and a ‘volatile market’ is deeply intriguing and highly questionable,” Surjewala told a press conference.

Describing the LIC as an “insurance giant” and a “crown jewel’, he said the government must answer four questions, including why the LIC valuation of Rs 12-14 lakh crore in February 2022 reduced to Rs six lakh crore in just two months.

He said the total assets of LIC runs into Rs. 39.60 lakh crore or $526 billion as of September last year and a stock portfolio of Rs 52,000 crore. The income from investments was Rs. 3.35 lakh crore in April-September 2021 while it directly employs 13.94 lakh families through its 3,542 offices across the country.

“The LIC issues three crore policies per year. In other words, one lakh policies per day. It is declared as the world’s tenth largest insurance brand,” he said.

Since January-February 2022, Surjewala said the share price band of LIC has been pared down by the Modi government from Rs 1,100 per share to the current price band of Rs 902- 949 per share. Some experts feel that the government will lose Rs 30,000 crore by reduction in embedded value and pairing down the price band, he claimed.

“The reason for Govt undermining the key determinants is unknown to every market watcher or financial expert. Why is the government trying to sell the LIC when domestic and global financial markets are in a turmoil on account of the Russia-Ukraine war and a host of factors leading to economic downturn?” he said.

Referring to the remarks of the Secretary in charge of disinvestment that the government will not sell its stake in PSUs if market conditions are not favourable, he asked, “why is LIC's IPO an exception to this policy?”

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(Published 03 May 2022, 09:53 IST)

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