Finance Minister Nirmala Sitharaman presented the Union Budget 2021-22 on Monday. In her budget speech, Sitharaman announced that the government plans to raise Rs 1.75 trillion through its ambitious disinvestment proposal.
#BudgetWithHT | “We propose to take up two public sector banks and one general insurance companies for stake sale in FY22. I propose to move amendments to the law this year. We will also bring LIC’s IPO this fiscal,” says @nsitharaman
— Hindustan Times (@htTweets) February 1, 2021
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As per the finance minister, BPCL, BEML, IDBI, CCI, Air India, Concor, Nischal Ispat, Pawan Hans will be disinvested in the current fiscal year. Two banks and one general insurance company to be taken up for sale as well.
For start ups, we are allowing 1% companies to grow without any restriction on their paid-up capital. Other than IDBI we plan to take up 2 more banks for disinvestment. LIC IPO will come in 2022. All divestments announced so far, including Air India, BPCL, CONCOR, Pawan Hans, to be completed by 2022,” she said.
The big, bold move of disinvesting LIC through IPO
Besides, Sitharaman also proposed to bring an Initial Public Offering(IPO) of the Life Insurance Corporation(LIC) in FY22. The finance minister added that she would be bringing the requisite amendments in this session itself for putting in motion the IPO of LIC.
The disinvestment of LIC through initial public offering is pegged as a big, bold move that would serve to deepen the Indian stock markets. On an average, LIC invests Rs 55,000 crore to Rs 65,000 crore in stock markets every year and is therefore the largest investor in the Indian stock markets.
LIC is India’s largest financial institution, and when listed on stock markets, it could easily emerge as the country’s top listed company in terms of market valuation, surpassing existent leaders Reliance Industries Ltd and Tata Consultancy Services.
This is because of the insurer’s financials. On a capital base of Rs 5 crore, LIC last reported a valuation surplus — or profit — of Rs 48,436 crore for FY2018, and assets under management of Rs 31.11 lakh crores.