LIC IPO, Privatization Will Kill Jobs, Impact Social Work: LIC Employee Union

Who would have thought that a potential initial public offering may become a cause of huge destruction.

Interestingly, the mega initial public offering of India’s biggest state-backed insurer may cause job losses.

It may even impact the company’s social infrastructure spending plans, according to one of its largest trade unions. 

Why Would This Happen?

Rajesh Kumar, general secretary of All India LIC Employees’ Federation, said that Life Insurance Corp. “was formed to provide insurance to rural and social and economically backward people,” in an interview with Bloomberg TV on Tuesday. 

According to Kumar, the life-insuring firm, which has been funding capital-intensive infrastructure projects such as roads, railways and power for more than six decades, may instead focus on “profit-maximizing investments” after the IPO. 

LIC IPO To Help Govt With Budget Gap

With this move, the Modi government is looking to dilute as much as 10% stake in LIC as part of a broader divestment target to help plug a widening budget gap. 

This offering is set to be the country’s biggest, could value the company at as much as $261 billion.

According to analysts at Jefferies India, this would even surpass big players like Reliance Industries Ltd.

LIC Employees Planning To Protest

The company’s trade union has already written to the prime minister and members of Parliament to protest about the listing.

So far, 4,000 of LIC’s roughly 114,000 employees are planning campaigns to raise concerns about the share sale, according to  Kumar. 

Further, he said, “We believe that selling national assets is a willfully disruptive policy,”. 

“Recruitment will be minimal, outsourcing will happen and job losses will take place,” he added. 

Govt Plan For Disinvestment

Last month, the government picked 10 banks for the sale that’s planned for between January and March 2022. 

Prior to this, Finance Minister Nirmala Sitharaman announced a divestment target of Rs 1.75 lakh crore for FY’22 in the Union Budget.

Which mostly consists of privatisation and strategic disinvestment.

During January, the Department of Investment and Public Asset Management (DIPAM) appointed actuarial firm Milliman Advisors LLP India to evaluate LIC’s value ahead of its IPO.

This move of the public listing seems to be very important for the govt as it could help it meet its disinvestment target.