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New Delhi, April 28
The Left parties have urged the Centre to stop initiating the LIC IPO. They have alleged that the Centre is undervaluing the public sector insurance giant.
The CPI(M) said the Centre’s move is a step towards the destruction of the public character of the LIC and would hand over priceless financial assets largely owned by nearly 29 crore policyholders. “Now the government wants to change the character of the financial institution from a trust of policy holders to a profit-maximising company owned by shareholders. The sale of shares of LIC is, in effect, the sale of future income flows to policy-holders. They have not been consulted or informed of the implications of the IPO,” the CPI(M) Polit Bureau said.
The party added that the latest estimate of Embedded Value (EV) of LIC was pegged at ₹ 5.40 lakh crore. “About two months ago, it was expected that the real worth of each LIC share would be arrived at by applying a multiplication factor of between 2.5 and 3. However, cajoled by international investors, the Government is now trying to scale down the valuation dramatically by using a multiplication of just 1.1 times LIC’s estimated EV,” the party said and added that LIC is allowed to be “valued” by “capricious international investors” out to make a fast buck at the cost of millions of policyholders. “This smacks of gross impropriety and financial wrongdoing,” it said.
CPI General Secretary D Raja said long-term assets of the country are being sold to collect revenue to meet the current expenditure. “Continuing with retrograde right-wing measures, the Modi government has announced that its share capital in the country’s flagship financial institution, LIC, will be sold off. With such sale, 22 crore LIC shares are being given to private hands, which will fetch about ₹20,000 crore of revenue for the Centre. The move is a totally retrograde one, which is against the national interests and against the interest of LIC’s policy holders,” he said.
President of the Centre of Indian Trade Unions, K Hemalatha, said the IPO is a step towards privatisation of LIC and handing over the more than ₹38 lakh crore assets owned by its 29 crore policy holders. “CITU extends full support to the massive movement against the LIC IPO and stands in solidarity with LIC employees and agents fighting the IPO that has been contemplated with the ulterior motive of privatising this premier institution that has been serving our people and the nation,” it added.
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