Union Budget 2020: P Chidambaram terms LIC divestment as 'debatable', Cong still undecided

Addressing a press conference after the presentation of the Union Budget on Saturday, former Finance Minister and senior Congress leader P Chidambaram weighed in on the Centre’s proposal of selling some of its stake in Life Insurance Corporation. Calling it a “highly debatable proposition”, he reckoned that the LIC had increased its share of first-year premium income in 2019. Moreover, Chidambaram reckoned that LIC had done very well despite facing tough competition. At the same time, he stressed that the Congress party had not made up its mind on the move yet.  

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P Chidambaram stated, “As far as LIC is concerned, it is highly debatable. To assume that every Public Sector Unit must go through a process of disinvestment, partial or whole is wrong. LIC actually has increased its share of first- year premium income in the last year as reported by the Chairman. It has gained in competition with very strong private sector players. So, we will internally debate it within the party. And we will give our view on the floor of the Parliament. I think it is a highly debatable proposition.”  

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LIC divestment announced

While delivering the budget, Union Finance Minister Nirmala Sitharaman made a crucial announcement about the divestment of LIC. The government will sell a part of its holding in LIC through the initial public offer. According to her, this would ensure more financial discipline. Without revealing more details, she said, "The government proposes to sell a part of its holding in LIC through the initial public offer." Currently, the government owns a 100% stake in LIC, established in 1956. For the fiscal year 2020-21, the Centre has set a disinvestment target of Rs. 2.1 lakh crore. 

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The Union Budget speech

Sitharaman commenced the budget speech by stressing that this was a budget to boost the income and enhance purchasing power. She noted that the fundamentals of the economy were strong, inflation had been contained, banks had been cleaned up and formalization of the economy had taken place during the NDA government’s first term in office. Moreover, she talked about the positive impact after the introduction of GST and paid homage to the late Arun Jaitley for his invaluable contribution. Thereafter, she listed the success of government schemes such as PMAY, Ayushmann Bharat, financial inclusion, etc. After this, she dedicated her speech to elaborate on the three prominent themes of the budget- aspirational India, economic development and caring society.

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