The Life Insurance Corporation of India (LIC) is deeply rooted in the lives of Indian people. In fact, its logo represents a promise rendered by the corporation to the people of India. It consists of a flame, that signifies life, and the protective hands of insurance. The LIC today is, however, at a crossroads where the danger of that flame being put off is a real possibility. The Department of Investment and Public Assets Management (DIPAM) is giving final touches to the procedure for finalising bids for the ultimate privatisation of the LIC. The bids are slated to open on July 14.
Until 1956, private capital had absolute control over the country’s insurance sector. The LIC was created in 1956 as a result of an initiative by the country’s first prime minister, Jawaharlal Nehru. Two hundred and forty-five foreign and domestic insurance companies were nationalised on September 1, 1956 with an initial investment of Rs 5-crore. Gradually, the LIC became a force to reckon with not only in the insurance sector but in the Indian economy at large. It supported vital sectors like housing, irrigation, power generation, water supply, beverage, roads and bridges, ports and railways. The LIC’s imprint is visible in the growth trajectory of all these sectors. The LIC derives its strength from the confidence of the country’s common people. It provides a sense of assurance to the lower and middle classes. The confidence of people in the LIC was so strong that when the private sector entered the insurance sector, it could not compete with this public sector giant.
The LIC’s moto, “Yogakshemam Vahamyaham,” draws from the Gita. It is an assurance to people that, “your welfare is our responsibility”. The corporation’s history showcases the efforts of its 1,08,684 employees (including staff and officers) and 10,69,816 agents. In a little more than 60 years, in excess of 28 crore Indians became the company’s policy holders and its assets grew to 32-lakh crore from 5-crore. The dividend given to the government by the LIC in 2018-19 alone was Rs 2,610-crore. The volume of LIC’s share in various public projects amounts to more than Rs 28 lakh crore. The bonus given to all its policyholders last year amounted to Rs 5 lakh crore. The significance of these achievements should be seen in light of the declining returns of some of the private companies. The Narendra Modi government, which talks about Aatma Nirbhar Bharat, ought to have strengthened the LIC. But it has taken the unfortunate step to mortgage this jewel in the crown of India to the greed of private profit.
The COVID-19 has taught the world a great lesson that the private sector is least committed to social responsibility. It is the public sector that has come forward to respond to the pressing needs of the people. The argument for privatising the LIC is based on the thinking that the move will augment the corporation’s efficiency. But surely the LIC couldn’t have grown from a 5-lakh company to one worth 32 lakh crore if it lacked efficiency. The LIC has a more than 76-per cent share of the country’s insurance market, even after the government and the insurance regulatory authority allowed private players to compete with. Does that make the LIC incompetent?
Years ago, the Peerless Insurance Company was launched by a big business group to dominate the life insurance sector. The company made several grand promises. Where is it now? Millions of people were cheated. Even the American insurance sector has been riddled with such cases. Those who talk about Aatma Nirbhar Bharat ought to learn lessons from such experiences.
After private companies become shareholders of the LIC, will the concern for social responsibility drive the company’s policies? Hereafter, the company’s predominant concern is going to be safeguarding the profits motives of its investors /shareholders. Bonus for the policy holders will be relegated to the last position in the priority list. As a result, the people’s confidence on — and affinity with — the LIC will diminish. The mission and the goal of the corporation will be turned upside down. The flame and the hands which assure millions of India will become mere symbols. All right-thinking people should endeavour to ensure that does not happen.
(The writer is president, All India LIC Employees Federation, and leader of the CPI in Parliament)
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