“If you get one rupee of disinvestment proceeds, you will be losing that one rupee which you could readily borrow from the savings pool on much more cost-effective terms, as government borrowings are backed by an implicit sovereign guarantee. The only difference that arises when the LIC is handed over to a few investors is that the government would then have dismantled an excellent institution like the LIC in the name of getting such illusory proceeds! I request your ministry and all others in the government who are concerned about this to ponder over the questions I have raised,” he says.The former secretary to the Union government further says that he understands that the MoF has appointed a private consultant to undertake the valuation of the LIC and according to the latest reports, “the estimated value of the public issue is Rs 15 lakh crore, and the so-called ‘embedded value’ (the statistical measure of investors’ interest in an insurance company) of the corporation is Rs 4 lakh crore.”Sarma adds, “The methodology of valuation, the assumptions that have gone into it and the factual information considered by the valuer have not been divulged in the public domain. It is unfortunate that the policyholders of the LIC and the public at large should get information on this only through rumours and gossip. If your ministry proposes to keep the public in the dark about such information, I am afraid that the entire LIC disinvestment process will stand vitiated, as it violates the letter and the spirit of Article 19 of the Constitution, which provides for transparency in governance”.
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