New Delhi: The mega initial public offering of India’s biggest state-backed insurer could result in job losses and impact the company’s social infrastructure spending plans, according to one of its largest trade unions.
Life Insurance Corp. “was formed to provide insurance to rural and social and economically backward people,” Rajesh Kumar, general secretary of All India LIC Employees’ Federation, said in an interview with Bloomberg TV on Tuesday. The company, which has been funding capital-intensive infrastructure projects such as roads, railways and power for more than six decades, may instead focus on “profit-maximizing investments” after the IPO, Kumar said.
Prime Minister Narendra Modi’s government is looking to dilute as much as 10% stake in LIC as part of a broader divestment target to help plug a widening budget gap. The sale, which is set to be the country’s biggest, could value the company at as much as $261 billion, surpassing Reliance Industries Ltd., according to analysts at Jefferies India.
The trade union, which represents about 4,000 of LIC’s roughly 114,000 employees, has written to the prime minister and members of Parliament to protest about the listing and is planning campaigns to raise concerns about the share sale, Kumar said.
“We believe that selling national asset is a willfully disruptive policy,” he said. “Recruitment will be minimal, outsourcing will happen and job losses will take place.”
The government last month picked 10 banks for the sale that’s planned for between January and March 2022. – Bloomberg
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