As the government has announced an aggressive disinvestment target of Rs 2.1 lakh crore for the financial year of 2020-21, the public sector behemoth Life Insurance Corporation of India (LIC) is the primary target in their list. While presenting the Union Budget 2020-21, Finance Minister Nirmala Sitharaman announced that part of government’s stake in the LIC will be sold off by initial public offering (IPO).
Soon after the FM’s announcement, unions in the LIC, who have been opposing any kind of privatisation within the corporation, stated that they are totally against the move to offer for sale the equity shares of the Centre through IPO. On February 3, the unions demonstrated during the lunch break in front of all the offices of LIC all across the country. Continuing the protest, on Tuesday, the unions will lead a one hour walk out strike from 12 PM to 1 PM in front of all the offices of LIC through out the country.
“We are opposing the announcement of Finance Minister Sitharaman to privatise the LIC, which means that they are going to list LIC in the stock market. Tomorrow (Tuesday), we are going on a one-hour walk out strike from 12 PM to 1 PM and in this strike, all the employees (class III employees, class I officers and development officers) will be taking part,” Siva Subramanian of All India Insurance Employees Association (AIIEA) and also the Joint Secretary of South Zone Insurance Employees' Federation told NewsClick.
Also read: ‘We Won't Allow Privatisation of LIC, It’s People's Asset'
“As part of the strike, there will be demonstrations and gate meetings through out the country. Almost all the employees would take part in the strike to make it a total strike,” Subramanian said.
Apart from AIIEA, Federation of LIC Class-I Officers’ Association and National Federation of Insurance Field Workers of India, who represent more than 90% of the total work force in LIC, will also join the protest series.
LIC, the largest insurance company in the country, has assets worth Rs 31 lakh crore and has a workforce of around 1.2 lakh employees. Even though the government had invested Rs 5 crore in LIC, the company had given back Rs 2,600 crore during last year as dividend.
However, the efforts to privatise LIC had started long back. “We are in this struggle for more than two decades- since the time of Naramsimha Rao government. Now, the government has explicitly announced that they are going to list LIC in the stock market,” Subramanian said.
The first insurance company in India, Oriental Life Insurance Company, was established in 1818. The nationalised company was started only in 1956. Till 1956, there were a bunch of private insurance companies. The then central government had passed the Life Insurance of India Act, 1956, which nationalised the insurance industry- over 240 insurance companies were merged to form the state owned LIC. The monopoly of LIC in Indian insurance market had continued till the re-opening of the insurance sector in the post-liberalisation period.
Also read: Successive Govts Paved Way to Dismantle LIC: Siva Subramanian
In 1993, at the time of the Naramsimha Rao government, a committee was set up under the chairmanship of RN Malhotra, former Governor of RBI, to propose recommendations for reforms in the insurance sector. Recommending that the private sector could be permitted to enter the Indian insurance sector, the committee had submitted their report in 1994.
As per the recommendations of Malhotra Committee, in 1999, the Insurance Regulatory and Development Authority (IRDA) was constituted as an autonomous body to regulate and develop the insurance industry. The IRDA, which was incorporated as a statutory body in April 2000, opened up the market in August 2000 with the invitation for application for registrations and foreign companies were allowed ownership of up to 26%.
“As far as the private insurance companies are concerned, they are in the market for the last more than 15 years. More than 23 life insurance companies are there in the Indian insurance market. However, LIC is the leading insurance company in India and we are doing much better than others,” said Subramanian. The unions also point out that handing over LIC to the private players is like throwing away the public money of last 60 years through which the LIC had been set up.