LIC IPO could result in job losses, social spending, trade union warns
The
mega initial public offering of India’s biggest state-backed insurer could
result in job losses and impact the company’s social infrastructure spending
plans, according to one of its largest trade unions.
Life
Insurance Corp. “was formed to provide insurance to rural and social and
economically backward people,” Rajesh Kumar, general secretary of All India LIC
Employees’ Federation, said in an interview with Bloomberg TV on Tuesday. The
company, which has been funding capital-intensive infrastructure projects such
as roads, railways and power for more than six decades, may instead focus on
“profit-maximizing investments” after the IPO, Kumar said.
Prime
Minister Narendra Modi’s government is looking to dilute as much as 10% stake
in LIC as part of a broader divestment target to help plug a widening budget
gap. The sale, which is set to be the country’s biggest, could value the
company at as much as $261 billion, surpassing Reliance Industries Ltd.,
according to analysts at Jefferies India.
The
trade union, which represents about 4,000 of LIC’s roughly 114,000 employees,
has written to the prime minister and members of Parliament to protest about
the listing and is planning campaigns to raise concerns about the share sale,
Kumar said.
“We
believe that selling national asset is a willfully disruptive policy,” he said.
“Recruitment will be minimal, outsourcing will happen and job losses will take
place.”
The
government last month picked 10 banks for the sale that’s planned for between
January and March 2022.
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