“LIC IPO Not Good for Country”: Kerala Assembly Passes resolution against LIC IPO

The Kerala Legislative Assembly unanimously passed a resolution on Wednesday, expressing concern about the Centre’s decision to sell stakes in insurance behemoth LIC and urging it to keep the institution, which has played an important role in the nation’s development.

“The union government is trying to justify its act by propagating that only 5 per cent stakes will be sold through an Initial Public Offering (IPO) and that is not privatization. But it is clear that selling shares is the first step towards privatization and that is the real objective of the government,” ​​Kerala Chief Minister Pinarayi Vijayan said.

The resolution, proposed by Kerala Chief Minister Pinarayi Vijayan, urged the Centre to keep its stake in the institution. Vijayan recalled that LIC was nationalised in order to protect stakeholders from private-sector exploitation. He believes that leaving the insurance behemoth to the interests of private players would be detrimental to the country, and that the union government should reconsider its decision.

He criticized the Centre for amending the LIC Act by including it in the Finance Bill and said that such an institution is being privatized now without any opportunity for a detailed discussion or examination in Parliament.

In presenting the LIC’s financials, Vijayan stated that the LIC’s assets have been valued at Rs 38,04,610 crore, which is equivalent to the central government’s one-year budget estimate.

The LIC’s profit, which exceeds Rs 4 lakh crore on an annual basis, is used for the country’s development activities, and it has so far invested Rs 36,76,170.31 crore, he said.

Vijayan went on to say that the LIC gave 95 percent of its profits as a bonus, which is much higher than what the private sector pays, and that nearly a quarter of LIC offices are in rural areas. Rural areas are home to 24% of LIC offices, while private insurance firms have a rural presence of only 3%.

In February, the Centre filed draught papers with capital market regulator SEBI to sell a 5% stake in insurance behemoth LIC through an initial public offering. The IPO is a 100% offer for sale (OFS) by the Government of India, with no new shares issued by Life Insurance Corporation (LIC).

The government owns 100 percent of the Stake in LIC. The government hoped to raise between Rs 60,000 and Rs 75,000 crore through the IPO. This would place a value on LIC of between Rs 12 trillion and Rs 15 trillion. The IPO was supposed to be postponed due to the ongoing conflict between Russia and Ukraine. Reuters, citing a senior government official, reported that “LIC would now most likely be listed by mid-April.”