Disinvestment of LIC: a strategic move of Indian government

Abstract

  LIC is known forits trust and secure life. The well-known punch line “ZindagiKeSaathBhi, ZindagiKeBaadBhi” now has a question mark? The main question arises why the government is making disinvestment of LIC. The simple answer is that Government wants funds. The present paper is an effort and an attempt to find out the reasons behind the disinvestment of LIC. The main objective of the study is to critically analyze the Disinvestment of LIC. The first part of the paper will cover the introduction and journey of LIC in India, objectives, review of literature, and research methodology. The second part will consist of a critical Analysis of LIC & its success and future projections after the disinvestment. The last part of the paper highlighted the limitations, findings, suggestions & recommendations, and conclusion.Keywords---disinvestment, insurance premium,LIC,life insurance,liquidity,market capitalization.Introduction Life Insurance Corporation of India has completed 63 years of its incorporation. LIC has played a significant role in spreading the message of life insurance among the masses, in particular to the rural areas,and mobilization of people’s money for their welfare. The main motive of LIC is to safeguard the well-being of the citizens of our country, to equip its vast and diverse nation with at least basic life cover so that the people of our country can be able to attain financial security for themselves as well as their family members. In its 63 years of journey, LIC has crossed many milestones and has set unprecedented performance records in various aspects of the life insurance business. LIC is surpassing its records and continues to be the dominant life insurer even in the liberalized scenario of Indian insurance(Chidambaram & Alagappan, 1999; Colinvaux, 1979; Crawford, 1998). LIC has shown growth on various grounds byits customer base, agency network, branch office network, new business premium and has a significant role in spreading life insurance widely across the country.