Likely delay in LIC IPO to hit government's disinvestment target for FY22

8 Mar 2022 , 01:45 PM

With the much awaited  Life Insurance Corporation of India (LIC) IPO likely to be delayed, India is set to miss the revised disinvestment target for FY22, second time in the past eight years.

The Russia-Ukraine war which has severely impacted the stock markets world over has prompted government to do a rethink with regard to the timing of the LIC IPO. Though there hasn’t been any official word on it, but If the IPO fails to hit the market by March 31, the government will stare at a huge shortfall in the disinvestment mop-up.

The government may not be able to raise an expected over Rs60,000 crore from the IPO of insurance behemoth LIC in 2021-22.

Previously in the financial year 2019-20, the Government had failed to achieve the revised CPSE disinvestment target of Rs65,000 crore. The mop-up during the year was only Rs50,304 crore.

But for the financial year 2019-20, the government has invariably exceeded the Revised Estimates of the disinvestment proceeds.

In the ongoing financial year 2021-22, the government was all set to go ahead with the share sale of LIC this month and draft papers for the same were also filed with markets regulator Sebi. However, the Russia-Ukraine war has dampened the plans.

So far, reportedly the government has collected Rs12,434 crore including Rs2,700 crore from Air India sale and Rs3,994 crore from sale of SUUTI stake in Axis Bank. It was banking on LIC IPO to achieve the revised target of Rs78,000 crore.

While Finance Minister Nirmala Sitharaman had set a target of Rs1.75 lakh crore through disinvestment in the Budget estimates in 2021-22, the target has now been revised to Rs78,000 crore. And for the year 2022-23, she has set a softer target of Rs65,000 crore.

LIC is yet to decide on the offer price for the listing, but the IPO is poised to be the largest in Indian stock market history and is crucial for the Centre to meet its Rs78,000 crore divestment target for FY22.