Burden on LIC as govt tries to meet Rs30,000-crore divestment target
21 Nov 2012
The finance ministry has permitted state-owned Life Insurance Corporation of India (LIC) to buy up to 30 per cent equity in a company as against the earlier limit of 10 per cent equity stake in any particular company.
With a higher share acquisition limit for entities like LIC, the government hopes to be better equipped to meet the Rs30,000-crore divestment target for the current fiscal.
"LIC can invest up to 30 per cent of a company's paid-up capital. Earlier it could invest up to 10 per cent," financial services secretary D K Mittal said today.
He said the finance ministry has already issued the notification relaxing investment norms for LIC.
LIC invests around Rs50,000-60,000 crore in equity annually and the new norms will enable the government to ask LIC to pick up higher equity in state-owned companies during the divestment process.
With an expected increase in the government's fiscal deficit, which is currently estimated at around 5.3 per cent, the central government wants to somehow push through the proposed divestments in central public sector units.
