Modi government is eyeing divestment from LIC this fiscal
What's the story
The Indian government is gearing up to carry out a series of offer for sale (OFS) transactions in the ongoing fiscal. Arunish Chawla, Secretary at the Department of Investment and Public Asset Management (DIPAM), has confirmed that these plans include a much-anticipated divestment in Life Insurance Corporation of India (LIC). The Centre's strategy is aimed at strengthening public participation and returns from public sector enterprises (PSEs).
Stake sale
Government's plan to bring LIC to every household
Chawla confirmed the government's plan to divest further from LIC, which currently holds a 96.5% stake after a 3.5% divestment through its IPO in 2022. He said, "Yes, we would. We would also share it with retail shareholders and policyholders. We want LIC to be part of every household in the country." The plans for this divestment will be modified throughout the year according to market conditions.
OFS success
DIPAM's in-house framework guides divestment strategy
Chawla credited the recent success of Mazagon Dock's OFS to DIPAM's in-house framework, the "DIPAM model." This model aligns corporate performance, dividend policy and market dynamics. He said, "We are relaxed, we are free from tension. Our model guides us on what to sell and when to sell. Mazagon Dock's OFS was a result of that strategy." Chawla also hinted at more surprises down the line.
Vision
Commitment to make public sector companies 'role models'
Chawla stressed the government was keen on turning public sector companies into "role models" for the Indian stock market. He said, "It's the PM's vision to share public wealth with the aam aadmi, and we genuinely want PSUs to lead by example." The government's dividend policy for Central Public Sector Enterprises (CPSEs) guarantees returns for the government and minority shareholders. CPSEs paid record dividends of ₹1.4 lakh crore this fiscal year, aiding senior citizens, retail investors, and mutual fund holders.