The claim of profits for the government, which is the primary investor, is limited to just five per cent while 95 per cent
Photo: Twitter (@LICIndiaForever)
The CPI (M) today criticized the Government’s proposed disinvestment of Life Insurance Corporation (LIC) shares through initial public offering (IPO) and said it can threaten the LIC’s role as social security provider to the disadvantaged people.
In an editorial in its journal People’s Democracy, the party said the LIC has a distinctive structure, which has enabled it to provide insurance to the common people.
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The claim of profits for the government, which is the primary investor, is limited to just five per cent while 95 per cent of its profits are mandated for policyholders, the editorial said. This is being lowered to 90 per cent through disinvestment.
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Even after the entry of private companies into the insurance sector, the LIC has been able to maintain its dominant position in the life insurance business. In terms of life insurance policies issued, the LIC’s market share is almost three-fourths of all life insurance policies, the party said.
The IPO will “radically alter the character of the LIC, as private investors, both Indian and foreign, will exercise pressure to shift the LIC away from its social welfare goals, which have been enjoined upon it by the Directive Principles of the Constitution,” the party said.
According to the CPI (M) editorial, “the valuation procedure for the LIC IPO has been opaque and has not been put in the public domain. It is reported that the value of the corporation is set at Rs 15 lakh crore and its embedded value of four lakh crore rupees, is a gross underestimate.”
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