This refers to “LIC equity portfolio takes Rs 57,000 Cr hit’ (September 17) by Jash Kripalani. Prior to the recommendations of the Sukhamoy Chakravarty Committee report in the 1980s, the government of India was in the habit of frequently inserting its hand into the Reserve Bank of India’s ‘cookie jar’, resulting in automatic monetisation of fiscal deficit leading to double digit inflation for decades.
The governments in the 21st century in India discovered a new way to finance their fiscal deficits, that is, using the Life Insurance Corporation of India (LIC) to invest, switch, buy, rescue and act as white knight with respect to the government’s ambitious disinvestment targets and saving IDBI Bank from going kaput. The funds available to the LIC are not ‘sovereign funds’ but hard earned savings of the people of India. Even sovereign funds like Temasek of Singapore do not conduct their financial dealings as unprofessionally and as irresponsibly as has been done by the LIC in the last couple of years.
One single misstep in the Budget forced foreign portfolio investors to take billions of dollars out of India resulting in massive erosion of shareholder wealth. The government has also lost its share of wealth in public sector undertakings. In this scenario, will it be possible for the government to meet its over-ambitious disinvestment targets?
Ganga Nayan Rath, Hyderabad
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