Budget 2020: Govt to Sell Part of its Stake in LIC, Faces Flak

The government proposes to sell a part of its holding in LIC by initial public offer. 

Updated
Business
1 min read

Finance Minister Nirmala Sitharaman on Saturday, 1 February announced that insurance behemoth Life Insurance Corporation (LIC) will be listed as part of the government disinvestment initiative.

She further said that the listing brings in more financial discipline among the entities.

The government proposes to sell a part of its holding in LIC through initial public offer, she said while unveiling Budget 2020-21.Currently, the government owns the entire 100 percent stake in Life Insurance Corporation of India (LIC).

The decision was met with widespread criticism, with several people pointing out that LIC is the lifeline of the middle class as well as one of the few profit-making Public Sector Undertakings.

The share price of the LIC Housing Finance Limited also tumbled from Rs 446.55 at 11 pm when Finance Minister Nirmala Sitharaman began her Budget Speech to 413.75 at 3 PM.

Budget 2020: Govt to Sell Part of its Stake in LIC, Faces Flak

Opposition parties were particularly critical of this decision, calling it a proof of the government’s failure in generating new investment.

Another line of criticism was in the context of the several kinds of tax exemptions that were removed, which could end up disincentivising investing in LIC.

However, some also pointed out the positive aspects of this decision that it was “financially important for deepening the market”.

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