LIC needs to sharpen its investment act

The Tuesday listing of the Life Insurance Corporation below its issue price was a damp squib. The timing of the LIC public issue was all wrong. Coming amidst the Ukraine war and rising domestic inflation, and consequently a higher PLR, the issue did not come in the most propitious of circumstances. Of course, putting it off any further would have delayed the issue much longer, requiring fresh regulatory approvals.

The issuers had to pare down both the size and price of the issue as well. It raised Rs 20,516 crores. The total disinvestment target is Rs 65,000 crores for the current financial year. Being still by far the biggest player in the insurance market, though it has yielded market share to private insurers in recent years, LIC can still hold sway should the Government stop interfering less in its running.

Over the decades a mere joint secretary in the Finance Ministry would seek to control its market operations, directing it to shares of company A and to ditch those of company B. Admittedly, this has virtually come to an end under the present government. But the LIC needs to sharpen its investment act to ensure better returns for millions of policy-holders. The below-par listing is not a major concern. Over time as the market sentiment improves the LIC shares too would find traction.