Two things about Modi's LIC move leave many MPs curious

NEW DELHI: As the government prepares for discussion and passage of the Finance Bill after the motion of thanks to the President’s address is passed by Parliament, considerable curiosity is building up among political parties and MPs on when and how the plan to sell shares in state-owned Life Insurance Corporation of India will be implemented.

Finance minister Nirmala Sitharaman said in her budget speech on February 1 that the government proposes to sell a part of its holding in LIC through an initial public offer. This would require a bill to amend the LIC Act to be passed in both houses of Parliament. Congress, the main opposition party, has already stuck a sceptical note on the LIC disinvestment and said it would make its stand clear on the floor of the house after internal deliberations. One question is whether the government will initiate steps on the LIC stake sale in this session or later, given that several budgetary calculations are said to be based on funds that can be mopped up from divestment in the insurer. The government has set a target of Rs 2.1 lakh crore from disinvestment in FY21.

Many MPs are curious on two counts. First, how prepared is the government to let LIC make disclosures – a mandatory requirement for an IPO – on closely guarded data such as the nature of the insurer’s investments and their financial soundness. “The LIC data disclosure assumes crucial importance and can have implications for LIC and others, given that it is not unknown that all governments have been dipping into the corpus of LIC – like that of RBI – for fiscal management and forex management,” a senior MP said.

The second aspect pertains to the legislative course that the government will take with the bill to amend the LIC Act and whether that attempt will be made during the budget session or put off to the next Parliament session. “As a matter of technical interpretation, a bill to amend the LIC Act can’t fall in the category of a money bill (which does not need Rajya Sabha endorsement). So, in the normal course, the government should bring it as an ordinary bill,” argued a senior Congress leader. 

“But, given how the Modi-1 government had controversially certified the Aadhaar bill as a money bill, no one should hazard a guess on what it will do this time.”While the Modi government has managed to get politically sensitive bills passed in Parliament, including those on triple talaq and the withdrawal of special status for J&K, amending the LIC Act may prove to be a bigger test, with many parties touchy over the perceived image of LIC as an “ordinary people’s money keeper.” “Our party is completely opposed to the disinvestment of profit-making PSUs, and, therefore, we will oppose the bill to disinvest LIC,” SP floor leader in the Rajya Sabha, Ram Gopal Yadav, told ET.

“LIC is where the ordinary people have invested their hard-earned money, which will face an uncertain future once LIC has fallen into the hands of private players,” said BSP MP Danish Ali. “ BSP will vote against the government bill to disinvest LIC.” While BJP ally Akali Dal’s MP Naresh Gujral said he fully supports the decision to disinvest LIC as “the government has no business to run businesses,” Saugata Roy of the TMC said his party is against disinvestment of profit-making PSUs.

Source: The Economic Times