Amid a widening fiscal deficit gap, the Narendra Modi led government is planning to seek cabinet's approval to sell 25 percent stake in Life Insurance Corp (LIC), said a Bloomberg report citing sources.
The unidentified sources also said the government plans to amend the act of parliament under which LIC was set up. The initial public offering (IPO) to sell the proposed stake, which will likely be sold in phases, will depend on market conditions, the Bloomberg report added.
After the COVID-19 outbreak in the country, the government's fiscal target of 3.5 percent of the GDP is under pressure and the government's stake sale in LIC will help meet the finances as well as achieve the disinvestment target of Rs 2.1 trillion for the financial year 2020-21.
The news report also said that as part of the proposal, the government will move an amendment in parliament for an authorized capital of Rs 20,000 crore which will be divided into 20 billion shares. A ministerial panel set up for asset sales will decide on the size of LIC's IPO while the cabinet will consider changes to capital structure of the insurer.
The proposal to sell stake in LIC via IPO was announced by Finance Minister Nirmala Sitharaman on 1 February this year at the Union Budget presentation.