CPI(M) says the stock’s valuation was lowered under pressure from international investors to make quick bucks.
CPI(M) says the stock’s valuation was lowered under pressure from international investors to make quick bucks.
Opposition parties criticized the central government for selling its stake in Life Insurance Corporation of India (LIC) as Initial Public Offering (IPO) which opens on May 4. He called it the first step towards destroying the public character of LIC, which holds two-thirds of the insurance market.
In a statement, the Communist Party of India (Marxist) [CPI(M)] Politburo expressed concern Reducing Valuation of LIC Shares It was alleged, which was done to make quick money under pressure from international investors.
“The latest estimate of Embedded Value (EV) of LIC was pegged at ₹ 5.40 lakh crore. About two months ago, it was expected that the actual value of each LIC share would be worked out by applying a multiplication factor between 2.5 and 3. However, buoyed by international investors, the government is now trying to reduce valuations dramatically. Using a multiplication of only 1.1 times the estimated EV of LIC,” the party said. It said it smacks of gross impropriety and financial misappropriation.
Congress leader Jairam Ramesh tweeted, “Very interesting that while filing the prospectus for its mega IPO in February, LIC disinvestment was 2.5 times the embedded value, but now the soon-to-open IPO valuation is just 1.1 times. Why is the Modi government so desperate to sell and sell cheaply?
The CPI(M) said that the Government of India had invested only ₹5 crore in it and now the total Jeevan Nidhi is ₹34 lakh crore. The party said that with the IPO, the government is selling the future income flow to the policy holders.
‘A desperate measure’
Communist Party of India (CPI) general secretary D. Raja described the IPO as a desperate measure by a government that failed to generate revenue as it was unwilling to take on the rich. “The sale is bound to affect the sovereignty and economic independence of our sovereign nation, which in contrast would benefit both domestic and foreign companies,” he said.