The center is likely to sell a 25 percent stake in LIC; Rahul Gandhi criticizes the movement

In an important event in the history of the Indian public sector, the Government of India is considering the sale of a 25 per cent stake in Life Insurance Corporation of India.

According to media reports, the Department of Financial Services has prepared a draft to sell the government stake in LIC. The draft has been forwarded to interested ministries, including SEBI, IRDA, and NITI Aayog.

The government is likely to make an initial public offering (IPO) to raise the necessary amount of money. An initial public offering is issued through the stock market to sell shares to the general public, with the intention of raising capital. If LIC’s IPO materializes, it would be the largest IPO in India’s financial history.

According to a news portal, the government intends to reduce its stake in the company from 100% to 75%. However, according to various reports, the government will first divest 10 percent of its shares and then divest the remaining shares through multiple rounds.

Something worth noting is the fact that the Indian SCI is not a normal entity, i.e. a company, but an autonomous body. It is not governed by the Corporations Law, but by the LIC Law of 1956. It is one of the most important public sector entities that is not listed on the stock market. Therefore, the Cabinet is likely to amend the Law to allow the sale of shares.

The government’s decision to sell its stake in LIC comes at a time when the economy is facing a difficult time, with GDP contracting 24 percent in the June quarter of this year due to the COVID-19 crisis. . In fact, the government’s plan to sell shares comes very close to the RBI’s annual report that recommended specific monetization of assets to raise capital.

However, the government’s idea has been criticized by the opposition, mainly by Congress. On Twitter, Congressional Leader Rahul Gandhi alleged that the Center is carrying out a campaign to “sell government companies” to offset the economic disaster it caused in India.

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