The Peoples’ Commission on Public Sector and Public Services(PCPSPS) has raised serious concerns on the disinvestment of Life Insurance Corporation (LIC).
In a statement released on Thursday by E.A.S. Sarma, former secretary to the Ministry of Power and Economic Affairs andthe co-chair of the commission, it noted that the disinvestment is a matter of concern, as the proposed IPO is happening in the midst of a pandemic, which has upended millions of livelihoods.
It also noted that at a time when there is a need to expand and consolidate social protection measures, a task that the LIC has performed commendably for so many decades, the thought itself was ill-timed.
Speaking to The Hindu, Mr. Sarma said that the Union Government has not contributed anything beyond the initial capital of ₹5 crore, way back in 1956. All subsequent investments have come from policy holders’ contributions.
The commission pointed out that disinvestmentwould change the character of LIC as the largest social security provider, andwould adversely affect the disadvantaged sections of society.
The manner in which the Union Government has recently amended the LIC Act, by reducing the profit share of the policy holders from 95% to 90%, is arbitrary andwould affect policy holders.
According to Mr. Sarma, the argument that disinvestment of the LIC and other CPSEswould bring in additional fiscal resources is illusory, as the government can access the same resources from the common pool of savings in the economy on far better terms.
The commission also found fault with the State government’s argument that listing LIC on the bourses would enhance transparency and functioning and create wealth for retail investors is not valid, as the corporation has already demonstrated its performance through years of profitability and by the multifarious social benefits that it provides to the disadvantaged sections.
The commission has demanded the Union Government to immediately withdrawits decision of disinvestment of LIC.
