LIC-GIC will go Maruti way -- Deora
ENS Economic Bureau

New Delhi, Sept 6: While the government continues to sing in different tunes on the sale of its remaining stake in auto giant Maruti Udyog, Congress leader Murli Deora today argued that if the government didn't act quickly in selling off LIC and GIC, they too would go the Maruti way -- that is, their profits would also keep declining, and so would their market capitalisation and overall value.

Deora, whose Parliamentary Committee first paved the way for the opening up of the insurance sector, argued that the government should sell off 26 per cent of its stake in both LIC and GIC and that this would fetch it around $5 billion dollars immediately. `The alternative,' according to Deora, would be disastrous. `Let's not forget that due to delays in selling off Maruti, it's profits have fallen to a third of what they were three years ago, and its market share is down to around 60 per cent from 85 per cent earlier. As a result, today, you won't get more than half the value you could have got if you had sold off the government stake.

The same will happen in the insurance sector. Once more players come into the insurance market, Deora predicted, the value of state-owned monopoly players like LIC and GIC was bound to fall. So why not sell off a large stake in them right now, and capitalise on the high present value, he argued?

Deora began his presentation by taking off from where disinvestment minister Arun Shourie stopped during a FICCI seminar on disinvestment today. While Shourie gave macro figures of the loss that the country incurred on PSUs, Deora cited similar figures from his state of Maharashtra. The NTC, he said, has 119 mills, has a turnover of Rs 600 crore and losses of Rs 900 crore and accumulated losses of Rs 6,000 crore. Who was paying for all this? Taxpayers.

Deora added that within a few months of taking over Modern Foods, Hindustan Lever had increased production by 32 per cent -- Modern Foods' production, it will be recalled, had been falling for the past few years.

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