Friday, October 7, 2022

The bailout behemoth that has funded most of Modi govt’s disinvestment plans

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New Delhi: When it comes to PSU disinvestment, there’s a government-run organisation that’s been ushered by the Centre in the past enough number of times to have earned the moniker, the ‘white knight’ — the Life Insurance Corporation (LIC) of India. This especially holds true under the Narendra Modi government because the bulk of the insurance company’s investments in the public sector have been done between 2014 and 2019. As the government chases its disinvestment target of Rs 1.05 lakh crore for the financial year 2019-20, here’s a look at the bills footed by the insurance behemoth in the past few years whenever the government took up PSU disinvestment.

47% of LIC’s investment in PSU sector done under Modi

Since its inception in September 1956, LIC has invested a total of Rs 22.6 lakh crore, showed the data released by the RBI in September this year. Also, around 47 percent of LIC’s total investment in the public sector was done under the Narendra Modi regime because this government has relied on PSU disinvestment way more than other governments have done in the past to make up for revenue shortfalls. Around Rs 10.7 lakh crore was put in by LIC between fiscal years 2014-15 and 2018-19. At the end of financial year 2018-19, 99 percent of LIC’s investments were in stock exchange securities. Between 2014 and 2019, the insurance company’s total investment in the public sector went up from 79 percent to 85 percent, while its investment in the private sector came down from 21 percent to 15 percent.

PSU disinvestment: When LIC pitched in with funds

One of the biggest deals that hogged the limelight in 2018 was the LIC increasing its stake in IDBI Bank to 51 percent with an infusion of Rs 21,000 crore into the bank. IDBI Bank, which has been now classified as a private bank by the RBI, had posted a loss of Rs 3,800 crore in the June quarter of FY2019-20 with gross NPAs at 29 percent. LIC has been among the major investors in stake sales by the government in PSUs like Coal India, NTPC, NHPC, NBCC and Hindustan Copper over the last few years.

(PSU Watch– India's Business News centre that places the spotlight on PSUs, Bureaucracy, Defence and Public Policy is now on Telegram. Join PSU Watch Channel in your Telegram and stay updated)

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