LIC లో వాటాల అమ్మకాలు, ప్రభుత్వ వాదనలలో నిజమెంత? || Whither Government Defends LIC Disinvestment? ||
Selling the family silver
Thus, the disinvestment of LIC has nothing to do with better corporate governance or any other professed objectives. It is simply an exercise to meet the mounting fiscal deficit aggravated by the government’s inability to either kick-start growth or raise public resources by taxing those who can pay. Thus, the disinvestment of LIC is nothing but selling the family jewellery for meeting the daily routine expenses that does not in any way make prudent economics.
Financing public expenditure
To substantiate this statement, let me explain the contribution of LIC to the government kitty. The Centre invested equity of a mere Rs. 100 crore. In just 2018-19 alone, the LIC has paid a dividend of Rs. 2,611 crores to its owner, the government of India. The total dividend paid by LIC since inception in 1956 is as high as Rs. 26,005.38 crore. The LIC paid a sum of over Rs. 10,000 crores towards Income Tax, GST, among other things in just one year. Besides, it contributes more than 25 per cent to the total budgetary efforts of the government.
The total investments of LIC as on March 31, 2019, is of the order of Rs. 29.84 lakh crore. It should be noted here that 82 per cent of LIC investments are in central and state government’s securities and other securities. The annual surplus available for investments for LIC ranges from Rs. 3.5 – Rs. 4.5 lakh crore. It needs no special mention that no private insurance firm will come forward to make available funds for social and infrastructural development, especially of such a higher magnitude.
Fallacious argument
The argument that the disinvestment shall improve the performance of LIC is simply fallacious, if not preposterous. The LIC mobilizes small savings of the people and makes them available for national development. The LIC is known for international performance records in various aspects of life insurance business. The public sector LIC no longer operates in a protectionist and non-competitive environment. Even after two decades of opening up the insurance business to private companies, both Indian and foreign, it still enjoys a market share of 73 per cent. The LIC started its operations with a paltry sum of Rs. five crore in 1956. Today it commands a humongous asset base of about Rs. 31 lakh crore. The total life fund of LIC as on March 31, 2019, was Rs. 28.28 lakh crore. The motto of LIC is to mobilise people’s savings for people’s development.
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LIC లో వాటాల అమ్మకాలు, ప్రభుత్వ వాదనలలో నిజమెంత? || Whither Government Defends LIC Disinvestment? || Selling the family silver Thus, the disinvestment of LIC has nothing to do with better corporate governance or any other professed objectives. It is simply an exercise to meet the mounting fiscal deficit aggravated by the government’s inability to either kick-start growth or raise public resources by taxing those who can pay. Thus, the disinvestment of LIC is nothing but selling the family jewellery for meeting the daily routine expenses that does not in any way make prudent economics. Financing public expenditure To substantiate this statement, let me explain the contribution of LIC to the government kitty. The Centre invested equity of a mere Rs. 100 crore. In just 2018-19 alone, the LIC has paid a dividend of Rs. 2,611 crores to its owner, the government of India. The total dividend paid by LIC since inception in 1956 is as high as Rs. 26,005.38 crore. The LIC paid a sum of over Rs. 10,000 crores towards Income Tax, GST, among other things in just one year. Besides, it contributes more than 25 per cent to the total budgetary efforts of the government. The total investments of LIC as on March 31, 2019, is of the order of Rs. 29.84 lakh crore. It should be noted here that 82 per cent of LIC investments are in central and state government’s securities and other securities. The annual surplus available for investments for LIC ranges from Rs. 3.5 – Rs. 4.5 lakh crore. It needs no special mention that no private insurance firm will come forward to make available funds for social and infrastructural development, especially of such a higher magnitude. Fallacious argument The argument that the disinvestment shall improve the performance of LIC is simply fallacious, if not preposterous. The LIC mobilizes small savings of the people and makes them available for national development. The LIC is known for international performance records in various aspects of life insurance business. The public sector LIC no longer operates in a protectionist and non-competitive environment. Even after two decades of opening up the insurance business to private companies, both Indian and foreign, it still enjoys a market share of 73 per cent. The LIC started its operations with a paltry sum of Rs. five crore in 1956. Today it commands a humongous asset base of about Rs. 31 lakh crore. The total life fund of LIC as on March 31, 2019, was Rs. 28.28 lakh crore. The motto of LIC is to mobilise people’s savings for people’s development. https://newsmeter.in/why-lic-should-not-be-disinvested-newsmeter/
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