The present government is on a selling spree. Cartoonists have crafted some promising cartoons showing the Finance Minister of the country selling BSNL, Air India, BHEL etc. like a vegetable vendor.
The government appears to have become bankrupt. It took away Rs 1.76 lakh crore from RBI and is now asking for more. In the Budget, 20% of the receipts come from loans and 18% of the payment goes towards interest-payment. It is the earlier NDA government which had started a Ministry for Disinvestment. The listing of LIC is only first step towards privatisation.
Some arguments posed in favour of privatisation are:
Argument number 1: It will bring transparency and discipline in these sectors and the shareholders will be able to question the authorities.
Answer: When LIC’s balance sheets are already available in open then what is the need for it? Moreover only 3-4% of the population invests in markets. Which eventually raises many questions like; who among the population is going to question? What is there to question? And what is there to be disciplined?
Argument number 2: It will benefit policy holders.
Answer: LIC shares it’s profit with policy holders at the ratio of 95:5. This is given as bonus to the policy holders. What more is needed?
Argument number 3: Listing will unlock the value.
Answer: With the investment of Rs 5 crores in 1956 today LIC’s asset value is more than Rs 31 lakh crores. This is quite phenomenal in itself.
THE MILESTONES OF L.I.C. STATISTICS WHICH PROVES ITS STRENGTH (As on 31.03.2019)
FACT SHEET: A RELATIVITY CHART OF L.I.C. AND ALL THERE PRIVATE INSURERS (2017)
All this naturally begs the question, why this listing in the first place? In my assumption there are three main reasons.
One, the government is on the verge of bankruptcy and just like a bankrupt, drunken husband who sells the Mangalsutra [wedding necklace] of his wife, it is selling public sector undertakings, Banks and Public Services.
Two, they are ideologically promoting Private Sector and listing now is only a step towards privatisation later.
Three, they want to annul the effect of reservation in jobs as Private Sector does not have reservation policy.
Citizens must beware that the net effect of all this will be an economic disaster for the country.
Thomas Franco is former General Secretary of All India Bank Officers’ Confederation.