Former Finance Minister T.M. Thomas Isaac said here on Thursday that the move to privatise the Life Insurance Corporation ( LIC) would cost its customers and the country dear.
Delivering the sixth Gulati memorial lecture, organised by Gulati Institute of Finance and Taxation ( GIFT), on ‘Liberalisation and Privatisation in the Financial sector: Case of Life Insurance Corporation of India,’ he said 95% of the surplus created by the company was given back to the policyholders as bonus and other incentives, three times the amount distributed by its rivals in the private sector.
“A private sector corporate is keen on the interest of its shareholders and distributes a major chunk of its profit as dividend while the LIC ploughs back its profit to policyholders and for nation-building. Hence, when the company is forced to act as a corporate entity the ultimate loser would be its customers and the country.”
Contributions ignored
Dr. Isaac said the Union government did not consider the all-round contributions of the LIC in nation-building in the past six decades when it gave the green signal for the IPO, paving the way for privatisation. He also said there were serious lapses in calculating the market valuation of the company as factors like brand value of the company and landholdings were not considered. Earlier Finance Minister K.N. Balagopal formally inaugurated the session.
Susheel Khanna, former faculty member, IIM, Kolkata, and governing body member of GIFT presided over the function. V. Sreedhar, former Associate Editor, Frontline, and Amanulla Khan, former president, All India Insurance Employees Association addressed the session. K.J. Joseph, director, GIFT; M.A. Oommen and Leela Gulati were present.
