LIC may shell out Rs 30K cr as Government mandates to part-buy SUUTI assets

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NEW DELHI: SEEKING to meet the disinvestment target, the government has asked insurance behemoth Life Insurance Corporation of India (LIC) to buy part of the equity assets of the Specified Undertaking of Unit Trust of India (SUUTI).

LIC is likely to shell out Rs 25,000-Rs 30,000 crore in order to purchase the stake. Like always, this year too, the country’s largest insurer will come to the rescue of the government’s disinvestment plans. The government has invited bids from merchant bankers to help it to sell minority stakes in 51 companies.

The proceeds would help to offset shortages in the government’s target from stake sales in state-run companies. Failure to meet its divestment goal forces the administration to slash spending on roads, ports and railways to meet deficit targets.The government has also kept the option open for including those companies in which SUUTI holds stake in the second CPSE Exchange Traded Fund, which the government plans in the current fiscal.

The government has set up an ambitious disinvestment target of Rs 56,500 crore for 2016-17.

Of the budgeted target, Rs 36,000 crore is to come from minority stake sale in public sector undertakings (PSUs) and the remaining Rs 20,500 crore is estimated to come from strategic sale in both profit and loss-making companies. In March 2014, the government had sold 9 per cent of its stake in Axis Bank held through SUUTI for over Rs 5,500 crore.