Budget 2022 | FM assures that LIC public issue will be floated in FY2022

LIC | Representative image

The disinvestment of the government's stake in the Life Insurance Corporation of India (LIC) will happen in the current financial year, Finance Minister Nirmala Sitharaman said in an exclusive interview to Network 18.

"It's (preparation for IPO) going fine, it will happen. Yes, it should happen this year," Sitharaman said.

On February 1, Department of Investment and Public Asset Management Secretary Tuhin Kanta had stated that the life insurer was likely to file draft IPO papers within two weeks.

The government has revised the disinvestment target for the current fiscal year to Rs 78,000 crore from the Budget estimate of Rs 1.75 lakh crore. With the government already pocketing more than Rs 24,000 crore so far from disinvestment, the proceeds from LIC's IPO are likely to be little more than Rs 50,000 crore.

Budget 2022 | Realism over FY23 divestment aim leaves questions over LIC IPO proceeds

The much-awaited IPO of the life insurance behemoth is expected to be the biggest in the country. Media reports earlier this year had suggested that the government was aiming to raise close to $12 billion by selling a minority stake to the public.

Recently Bloomberg reported that the government is looking for a valuation of $203 billion for the life insurance giant, which will make it the second-largest listed company by market capitalisation.

With the FM assuring that the LIC IPO will go through in the current fiscal year, it appears that the government will be raising much less than what was expected by market participants and economists.

If LIC IPO goes well, Govt will be able to achieve FY22 divestment target: Revenue Secy Tarun Bajaj

The finance minister also said that she remains committed to completing the disinvestment targets set out in previous Budgets such as the privatisation of Bharat Petroleum Corporation, Shipping Corporation of India, and major stake sale in Container Corporation of India.

The sharp cut in the Budget estimate on disinvestment to Rs 65,000 crore for 2022-23 had raised eyebrows over the government's timeline for completion of the disinvestment target set out in previous Budgets.

"My commitment to last year's Budget targets continues. There is a question of timing your disinvestment," Sitharaman said.

The finance minister clarified that the government's disinvestment activity cannot be solely driven by how the domestic or global stock markets are performing.

Alluding to opinions that the government should have capitalised on the boom in the stock market in 2020 and 2021 to execute its disinvestment target, the finance minister said: "It's not just the stock market that decides the timing. I have to take everybody on board as well."