Skip to main content

India- Is the government misusing LIC?

The government is battling crisis on several fronts, a sputtering economy, soaring crude oil prices and inflation amongst others. One of the biggest concerns is the spiraling fiscal deficit. The central government has found it tough to rein in the deficit given the high spending on fuel subsidies and social welfare programmes, coupled with heavy borrowing and low collection through taxes. Though the government believed that its disinvestment programme would help tide over the cash crunch to an extent, the plan has not panned out as per expectations.
In order to get the fiscal situation under control, the government is using Life Insurance Corporation (LIC) and other public sector undertakings (PSUs) to fill its cash kitty. LIC of India has come to the Government's rescue repeatedly in the recent past. It bought shares in state-owned banks in 2009. In 2010, it bought the government's stake in a mining firm. This time, it is injecting a billion dollars into some state banks. It has also bought out part of the government's stake in an oil firm. It held 4% stake in 34 PSUs in December 2008. This increased to 5.6% stake in 42 PSUs at the end of 2011.
LIC's role was highlighted in the recent ONGC episode. The insurance company invested more than Rs 150 bn in ONGC this quarter, which includes the shares divested by the Government recently. It is also planning to infuse Rs 78 bn into public sector banks in the coming months. The insurance giant is however not showing a similar preference for private sector companies. Its stake in private companies has more or less remained the same.
In the middle of all the drama, perhaps the biggest losers from the government's arm-twisting of LIC are the policyholders of LIC's insurance contract. They might have lost 25% of the value of their investments so far in government-owned businesses

From http://in.finance.yahoo.com/news/government-misusing-lic-030000406.html

Comments

Post a Comment

Popular posts from this blog

LIC Buys Double as Prices Dive - 10 Aug 2011

http://licreddy.com/Content/information/insurancenews_details.asp?NewsCode=4872 LIC Buys Double as Prices Dive 10-Aug-2011 Life Insurance Corp of India, the government's institution of choice to stabilise the stock market whenever it gets wobbly, has more than doubled stock purchases in the past three days as the global debt worry-triggered selloff made valuations attractive. LIC, the country's biggest investor with stakes in L&T, Axis Bank and Grasim, will raise its secondary market purchases this fiscal as IPOs dry up with promoters not keen to sell shares at lower valuations. "We have been buying in the past few days,'' said a LIC executive involved in decisionmaking. "With the market correcting and not many public issues coming up, we would be investing more in secondary market," said the person who did not want to be identified. LIC to Invest . 50k Cr More LIC, which had been buying stocks for an average of . 120 crore in the first four...
Post a Comment
Read more

Best IELTS and English language training institutions in Hyderabad

IELTS stands for International English Language Testing System. As the name implies it is basically an English test for testing the proficiency of the language in an individual.  Training for IELTS can be taken to pass the IELTS exam or to develop good english language skills. I am giving the training institute addresses for Hyderabad. The test system is jointly managed by the British Council,IDP education ltd and University of Cambridge ESOL Examinations and more than 1 million candidates are taking the exam all over the world. The test has two versions : 1. Academic 2. General training Academic  version is for people who plan to continue their higher education by enrolling in universities in countries like US,UK,Australia,Canada,New Zealand etc.The academic institutions in these countries consider the IELTS score as a criteria for the admission process. General training is mostly for immigration purposes in countries like Australia,New Zealand,Canada etc. It may ...
9 comments
Read more

Home loan or Car loan calculator

A good EMI calculator http://www.bankbazaar.com/home-loan-emi-calculator.html Tax benefits: Tax benefit is only on the interest paid on the loan taken. Prohibition of Usury in Various Religions Hinduism The earliest such record derives from the   Vedic   texts of Ancient India (2,000-1,400 BC) in which the "usurer" ( kusidin ) is mentioned several times and interpreted as any lender at interest.  More frequent and detailed references to interest payment are to be found in the later   Sutra   texts (700-100 BC), as well as the Buddhist   Jatakas   (600-400 BC).  It is during this latter period that the first sentiments of contempt for usury are expressed.  For example, Vasishtha, a well known Hindu law-maker of that time, made a special law which forbade the higher castes of   Brahmanas   (priests) and   Kshatriyas   (warriors) from being usurers or lenders at interest.  Also, in the   J...
3 comments
Read more