LIC IPO Rejected By Employees As Massive Strike Declared Against 10% Disinvestment, IPO Plans
By now, all of you must have been in terms with so much commotion and unrest going on, regarding the political blinds India finds itself into. In fact, last year has seen much change in the socio-political and economical shifts, contrary to the way the country expects things to commute.
With privatisation of government bodies and assets, resulting into countless strikes on streets comprising of multitudes chanting against the government policies, we all surpassed 2019, entering 2020.
The start of this new leap year bought with it unsure waves of a wide spectrum of debates and their outcomes. In such similar events, we take you to the financial sector today.
Heavy reports are in that post announcement of Finance Minister Nirmala Sitharaman’s budget for financial year 2020-21, led to the government’s decision of stake sale of LIC via IPO.
Government to Sell Its Stake in LIC
The Finance Minister Nirmala Sitharaman on Saturday while presenting the Budget for 2020-21, proposed to sell a part of its holding a part of its holding, Life Insurance Corporation (LIC) through an initial public offering. Currently, the government fully owns LIC.
The government aims to achieve Rs 2.1 lakh crore disinvestment target that it has set for the next financial year, which is way more than last year’s Rs 1.05 lakh crore. It has taken this decision as a step towards achieving the same interest.
LIC Employees to Conduct a Strike
On learning about government’s decision to sell its stake in LIC via IPO, the employee union of LIC will hold a nationwide strike on Tuesday to protest against the government’s move. It is obviously unhappy with the government’s decision.
LIC claims to hold a one-hour nationwide strike today (Tuesday) from 12.15 to 1.15 p.m, to demonstrate their unhappiness in all of its offices, later hitting the streets to protest and resist the step.
As per the All-India Life Insurance Employees Federation General Secretary, LIC has always been the last resort for funding for other public sector entities. They too strongly oppose this move by the government.
What Does LIC Fear?
Describing the proposal of partial disinvestment of LIC as “against national interest”, LIC has now become India’s biggest financial corporation in terms of assets, even surpassing the State Bank of India.
According to the figures released in December, LIC single-handedly managed to secure about 80% of the market share in the insurance business despite the presence of 24 private companies.
LIC and the Insurance Body fear that any dilution of the government’s stake in LIC would shake the faith of the policyholders in the institution. In fact, even though the government hasn’t revealed the amount of the holdings it is planning on selling, past experience suggests that a majority of stake would be sold, resulting in LIC losing its public sector status.