Posted in Economic

The LIC Privatization

If LIC is on peril on privatization, then so are private pension funds in India such as HDFC, ICICI, Max, etc. And what about the private banking institutions. I was a bank employee myself and I worked for a private bank that was held by seven private and public sector banks with no retail investor. Now the bank is taken over by the parent public bank. I can recall the sentiment of fear and anxiety when private banks came into existence in India in a big way starting from the turn of the millennia. Indeed there was some ground for the public apprehension: one such a private bank, the Global Trust Bank, did go under. But there are others who have outperformed over economic forecasts from right their inception, the chief among them being HDFC and ICICI and UTI (Axis). These banks also have entered the insurance industry and stock markets and mutual funds. Should these banks fail, it means the end of India as a nation: that is how big these private institutions have grown into and spread wings (branches) pan India with roots well entrenched in strong fundamentals in the country as we have had the Indian public stand eyewitness to their taking babysteps from day one to expand into impressive institutions with global reckoning. So much so that it is private banks such as Axis, ICICI and HDFC that are most efficient today than the nationalized ones who are mostly queued up for mergers as they show heavy balance of the Non Performing Assets (NPA) accumulated over years. The private banks have been harbingers of modernization and computerization, taking technology to grassroots level quicker than public banks. Their banking service is considered benchmark today in entire banking industry. They dispense more cash with an impressive network of ATMs which is a proof to their liquidity, and their processing and disposal of loans etc., is much faster. When it comes to cards issue, they are par excellence with international validity that cannot be matched by nationalized banks. Indian citizens now prefer equally if not more the private banks, and this is by no means any exaggeration. In other words, the private banks of India today have metamorphosed into pioneer financial institutions of the country within very short span of time.

In life insurance and pension industry as well, we have participation of PNB Paribas tied up with SBI, HDFC, ICICI, Axis tied up with Max, etc., that have come out with credible results and performance. Not all are unit based funds. Mutual funds as well stock markets too see a healthy participation from the private banking sector over the government owned financial institutions.

India’s has been a mixed economy with both the government and private entrepreneurs working in tandem to cater to public demands. This is how our national economy has been operating since the dawn of our independence. Before Indira Gandhi nationalized the private sector banks in the year 1969, the Indian Overseas Bank, Indian Bank etc., were privately founded and managed by efficient hands turning out profits. In fact, the May Bank of Malaysia was founded by Tamil Chettiars which was nationalized at a later date by the Malaysian govt. The May Bank was the first ever banking institution founded in Malaysian history that is the pride of every single Malaysian Indian. This underscores the participation of the private sector that cannot be written off. Even today conservative private sector banks such as Karur Vysya Bank, etc., are rated best among the industry.

The private banks and insurance industry have been forerunners of some wonderful products (financial) over public financial institutions. Their interest earnings are far better. Their schemes are very flexible and their apps/platforms for trading etc., are user friendly. As for general insurance such as automobile and (foreign) travel insurances, the private insurance companies have a huge presence and may have overtaken the nationalized ones already. You only have to take govt insurance and private insurance for your two different cars and make a claim to discover which is fast and best and more reliable. In the health insurance industry as well, we have private health insurance companies leading from the forefront. The Star Insurance and Apollo collect the bulk of premiums over national health insurance companies.

That brings us to health industry. Who among us is willing to go to Omandurar govt hospital or Kilpauk or Stanley. The private health industry cater to all segments as per our budget: from five star hospitals such as MIOT to the neighbourhood polyclinic with specialists visiting on appointment.

Even in air travel, who is getting the general janata fly from one corner of the country to the other cheap and fast? Only the private airlines such as the Indigo. What stopped the government from founding more economic airlines to service the masses? When a private entrepreneur can operate a budget airline adhering to air safety protocol at profit, why cannot the government. What was the condition of Air India all these years. The former national carrier will be turning a new leaf shortly with the takeover by Tata.

If everything has to be nationalized, we must first down the shutters of some private political tv channels founded with ill-gotten money violating FERA regulations as it has been alleged. We shall have actual PEACE and NO VIOLENCE in this country.

Indians today prefer to enroll their wards in private or deemed (autonomous) institutions over established public universities is it not? Except for the first tier of IIT/IIM/AIIMS and the second tier such as NIIT/JIPMER etc., who among us would want our children attend government colleges. Will those who raise voice against privatization send their children Presidency College and Arts College. Or to Corporation schools or Government schools. I am proudly the product of a government aided State board school. Understandably, the private institutions have better lab facilities these days and employ the best brains for faculty over government universities.

In rural India, it is the private buses that come to the rescue of our masses living in far flung villages with no bus routes. The public transport such as railway may still be miles away.

How many of us have BSNL broadband at home. Why should we go for Airtel or Hathway or ACT. How many of us use BSNL network for mobile operator. How many among us use Vodofone or Airtel.

I am not for Reliance at all, yet I miss the Reliance petrol stations for their superior service and washroom facilities. No IOC or BP or HP outlet in India can match the Reliance standards. Highway travelers will agree with me.

Finally, today it is the private industry Information Technology (IT) that generates and employs a major chunk of our fresh graduates. The word to note is: EMPLOYMENT GENERATION. This is now done best by the private sector be it in manufacturing industry or what you call core industry or financial or tertiary sector. This is also one industry where foreign participation is enormous, that it can hurt us if anything goes wrong ‘on site.’ Public institutions simply do not have in them such a mammoth capacity to absorb skilled labour or they have been systematically weakened over decades by the preceding Congress govt that today they have degenerated into skeleton institutions and nothing more.

Note: Most of private industry have sizeable foreign participation already. Pharma for one thing. Startups such as Swiggy are possible only thanks to foreign investments. We live in an interdependent world: not in an insulated and isolated bubble just by ourselves. How many of us have modular kitchen installed without a foreign collaborated unit. How about our air-conditioner units. Automobiles. Refrigerators. Mobile phones. Even our furniture. TVs and PCs/Laptops/IPads. Dove soaps. Garnier shampoos. Loreal cosmetics. And we talk about nationalistic policies.

How about leaving Hindu temples to Hindus now. Will the DMK government give back our temples to Hindus. Or will they equally take over the churches and mosques, audit them, staff them and use their funds as it has been happening with Hindu temples? All Hindu temples across India have to be given back to their devotees for management. Indian government and state governments have been SHAMELESSLY using Hindu temple money to meet their own selfish ends. If Hindu temples have to be in govt care, then all churches and mosques must be similarly taken over and their financial positions gazetted along with details of Hindu temple fundings. I challenge our governments to do it or hand over Hindu temples to Hindus.

Private Industry such as the Tatas, the Birlas, TVS, Ashok Leyland etc., are hallmark manufacturers of India who have gone on to acquire foreign assets. What was the first Indian company to get listed at NASDAQ in our history? INFOSYS. Who have global imprint today employing millions around the world.

I have not gone into the financial analysis of LIC with relevant statistics for my write-up. My logic lies in weighing the pros and cons. We have encouraging precedents and we are hopeful that LIC will follow a similar path to privatization and healthy zooming profits in future. If this boat is to sink, remember India must go under, God forbid! To empty talkers who have no patience or inclination or facts and figures, ignorance is truly a bliss!

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Until now i have not googled LIC privatization. I am adding a few lines from googling hereunder:

LIC going public is fine but the foreign participation must be capped to 49% maximum with controls resting with Indian hands on disinvestment. LIC has been conservative institution in Indian history. The public reaction on privatization is understandable and must be addressed. Foreigners holding stake upto 75% may carry risk component that can rock the ship. Let PM Modi not forget Lehman Brothers. As financial institutions grow, their expansion beyond boundaries cannot be helped. Joint ventures have to become public listed corporations, etc. Key industries with security concerns such as the Defence, Space etc., and mass facilities such as major rail routes need not have to go in for privatization. However luxury private trains are permissible and are already on operation such as ‘the palace on wheels.’ Along with star rated hospitals, the public health centers (PHCs) need to be expanded for the general public. The private and public industry can co-exist in mixed Indian economy servicing to different segments of our population.

PS: I am no financial pundit or qualified expert to speak on this. Just a housewife’s cue 😀

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