LIC Equity Portfolio Erodes to Rs 57,000 Crore in Current Quarter, Gross NPAs Spurt

New Delhi: Investments by public sector Life Insurance Corporation of India (LIC) increased by a whopping 76% between 2014 and 2019, according to the latest data put out by the Reserve Bank of India (RBI). This figure is significant in understanding Prime Minister Narendra Modi’s disinvestment target, as LIC was regularly fleeced as a cash cow to rescue troubled public and private entities.

As of March 2019, LIC made investments worth Rs 26,61,564 crore, including Rs 22,64,149 crore, in the public sector and Rs 3,96,317 crore in the private sector. The insurer’s total investment in 2014 was Rs 15,11,133 crore.

These massive investments have troubled the country’s largest insurer, data show. According to an analysis by Business Standard, LIC’s equity portfolio was eroded to Rs 57,000 crore in the current quarter of this financial year. It has been reported that as of the June quarter, “LIC’s holdings in listed companies stood at Rs 5.43 trillion. At current prices, the value of these holdings stands at Rs 4.86 trillion, translating into a mark-to-market hit of more than Rs 57,000 crore or 10.5 per cent.” For this analysis, LIC’s stake in 336 listed companies is considered.

According to the report, LIC's current quarter stake-holding value in ITC shrunk by Rs 6,520 crore since June end. Similarly, the insurer's holdings in State Bank of India declined by Rs 6,034 crore and by Rs 4,253 crore in L&T, during the same period.

In addition to this, LIC’s non-performing assets (NPAs) have more than doubled during the period, while the government collected about Rs 2 lakh crore by selling off public sector enterprises in the name of disinvestment, during this period. LIC's gross NPAs grew to Rs 25,241 crore in 2017-18 from Rs 12,213 crore in 2014-15.

LIC has been a cash-rich public entity with an annual investible surplus of Rs 3-3.5 lakh crore. The Narendra Modi government asked the LIC to give soft loans to the Railways, National Highways Authority of India among others. It had to subscribe the power sector’s Ujwal Discom Assurance Yojana (UDAY) bonds and had made investment in the National Investment and Infrastructure Fund (NIIF). In June last year, the government made it buy sinking IDBI at a cost of nearly Rs 13,000 crore.

Analysts argue that the ruling Bharatiya Janata Party-led government’s strategy of using LIC to bail out troubled public entities had behind it a larger agenda of privatisation of public sector units.