LIC Stake sale; For who’s benefit is it anyway?Ever since our Finance Minister Smt.Nirmala Seetharaman mooted the idea of LIC stake sale in the Budget, the sea of information, the discussions, articles, sharp criticism spread across the country just about signifies the enormous amount of goodwill LIC institution carries among the people of the country. It has also been obvious that so far no coherent justification has been made substantiating the proposed LIC stake sale.Four reasons were stated in the Budget. The listing will discipline a company, give access for its capital needs, shall unlock its value benefiting retail investors and transparency are the four issues raised in justification of the stake sale announcement. The most obvious reason being the target of Rs.2.1 lakh crore disinvestment target in the Budget.Capital needs; That of LIC or the Market?The share markets do indeed cater to the capital requirements of the listed companies. Share Markets have come to become a popular and integral design in the age of neoliberal economy. The proponents of the capitalist system want the capital markets to surge ahead as prime movers of the economy even overbearing the mandate of the financial arms of the state in countries of the world. Yet, it is the cyclical crisis of the capitalist model that reaffirms the relevance of the state as the 2008 crisis showed the entire world.The moot question is Whether LIC needs capital? With more than 5.6 lakh crore of total income, more than 30 lakh crores of assets, a steady stream of premium and investment income, LIC has not been searching for capital for its business needs. In fact, it is resourceful enough to fund 25 per cent of the borrowing needs of the central government. Hence the doubt arises if the stake sale is to meet the capital needs of LIC or that of the markets?Will retail investors benefit? Yes without a doubt. In a country where only less than two per cent of the population access the share market, unlocking the value of a mammoth financial organisation for the purpose of retail investors obfuscates the stated purpose. But in the process, the stake fully enjoyed at present by the entire 135 crore population of the country will be shrunk to accommodate a few thousand out of the estimated four crore retail investors in the country. The Finance Minister seeks to draw the support of the investing public in the country with the argument.Will listing Discipline a company?The country including the government has remained a muted spectator even as the savings of millions of retail investors in the markets were lost as the likes of DHFL, ILF&S, RCom, Reliance Defence, Essar, and the newest in the block Yes Bank just keep fading from the favourite lists in the markets.We are still witnessing the inconclusive debates between the present FM Smt.Nirmala Sitharaman and earlier incumbent Sri.P.Chidambaram on sharing the legacy of the more than 8 Lakh Crore Non Performing Assets that have wrecked the Indian Banking System. Were not the Banks that lent the loans listed in the market? Were not the companies and large industrial groups who failed to repay the loans listed in the market? Could the FM explain why the markets failed to discipline the companies in question? The Yes Bank was a famed listed entity in the market.The latest crumbling of the Yes Bank just reveals the limitations of the regulatory framework in practice in a crisis. The market regulator SEBI has been watching in despair while businesses fail continuously pushed to the verge of ruin by none other than the promoters, who rise amid the chaos, remain affluent and richer than before their venture. The government has had to formulate an Insolvency and Bankruptcy Code to deal with the emerging challenge thrown open by the unscrupulous crowd in the corporate world.Transparency and the market…One can witness few analysts in the market who raise the issue of transparency to question the government, specifically the finance ministry in not letting the LIC full functional autonomy with particular reference to some of the investment decisions. Strangely, the FM herself has come up with the issue of transparency with regard to LIC stake sale. If the FM too attributes such a reason, she is in a perfect position to accord full further possible autonomy and operational control to the LIC management.All insurance companies including LIC are subject to IRDA’s supervision and control. IRDA has come out with exhaustive investment guidelines in 2016. Each company has to file quarterly, half-yearly and yearly reports on all their specified activities. Companies are subject to public disclosure norms and these details are there in the IRDA web site. In fact, LIC being a fully owned government institution it is also accountable to the parliament apart from meeting the industry standards.The top brass of LIC has been constantly been followed by the financial press. Questions have been asked seeking answers about specific investment decisions that may not have had the desired results or which the press regards worth of further clarification. The LIC management has been pestered with questions about the NPA even though it has repeatedly clarified that the total NPA is under 0.4 per cent and has been fully provided for.On the other hand, we may rather say that the LIC has never received its due in terms of public attention. Had a private institution made all the achievements that LIC has done until now, the financial world would have celebrated in every possible manner to celebrate its success. The Chairman of the company would have found a special prominent place in the Prime Minister’s entourage on its visits abroad. The world of TV and press would have woven a larger than life image of this invincible brand given its contribution to the people at large, the society, the government and the nation.LIC has been a nemesis to the pundits of the market who have not been able to ascribe to the reality of the institution continuing to be the market leader after two decades of opening up of the industry. Hence, they seek to destabilise with whatever possible argument. And transparency is just one of them.Will the policyholders, the employees be affected?The government has clarified that the government guarantee under Sec 37 shall remain. The policyholders of LIC or the employees will not be affected immediately. But the government move may well end up harming the very interest of the government itself in the long run.We all have heard about the story of Bhasmasura being granted a boon by Lord Shiva after long penance. But, very soon Bhasmasura would make life difficult for Lord Shiva who granted him the boon based on his penance. It is our ardent fear that the fate of Lord Shiva should not befall on the Government of India.The last argument is the small percentage of the intended stake sale. All other arguments are buttressed with the final word about the small per cent that is proposed to be sold by the government. Like the Akshaya Patra, the inexhaustible vessel, LIC is an inexhaustible source of revenue to the government. The argument of small per cent is similar to a smaller hole on the face of the Akshaya Patra, which is never acceptable.The LIC of India celebrated its 65th anniversary on 01 September 2020. LIC is a success story of Independent India. The enormous contribution of the public sector LIC to the nation merits the institution to be preserved and nurtured for all future generations. LIC of India is the most powerful tool in the hands of the government in its much avowed ‘Atmanirbhar’ initiative. LIC of India deserves to be left as a jewel in the crown of all governments to come.