The Russia-Ukraine war may delay the Life Insurance Corporation of India (LIC) IPO to the next fiscal. The Centre is exploring the possibility of shifting the mega LIC initial public offer as it gives priority to managing fuel prices which are likely to raise once the election results to five states are announced on 10th March. LIC filed a draft red herring prospectus with SEBI for the sale of a 5% stake by the government on 13th February.
The war has pushed crude prices above $100 per barrel and even the stock market turns so volatile that it could scupper the prospects for the LIC flotation, the Centre needs to manage the excise duties of petrol and diesel.
The Finance Minister Nirmala Sitharaman said that, “Ideally, I’d like to go ahead with it because we’d planned it for some time based purely on Indian considerations but if global considerations warrant that I need to look at it, I wouldn’t mind looking at it again.”
Some top economists said that the government should postpone the LIC IPO to the next fiscal as it faces the challenge of balancing inflation and growth in FY23.
The Chief Economist Aditi Nayar said that, “A modest upside to the GoI’s net tax revenues in FY2022 compared to the RE (Revised Estimates) level, and an undershooting of capex, which will help to absorb any shortfall in disinvestment receipts, in the event that the inflows from the LIC IPO do not materialise within this fiscal.”
She also said that, “CGST revenues are likely to exceed the Government of India’s FY2022 RE by up to Rs 0.3 trillion, complementing the anticipated overshooting in direct taxes.”
