Letter to BS: LIC's bailout of debt-laden IL&FS makes little sense

This refers to “Investor of last resort” (August 3). I agree with your views that the government is using Life Insurance Corporation of India (LIC) to invest in loss-making entities and misleadingly calling them “win-win proposition”. First, it was the increase in investment in the badly indebted IDBI Bank and now in loss-making infrastructure firm IL&FS. 

It is extremely disconcerting that the government is using entities like the LIC and the Reserve Bank of India to shore up its finances. In the case of the former, it is a disservice to the millions of LIC policy holders and pension plan owners, while in the case of the latter, it will result in weakening the central bank financially at a time of economic uncertainty and volatility. Arguments stating that LIC will benefit in getting IDBI branches as sales outlet for its products doesn’t hold good. LIC has done that through its own outlets and agents, and certainly does not need the branches of loss making banks to do its business. I wonder what argument will be advanced to justify directing LIC to invest more in IL&FS, an entity that has failed to make profits since 2011. Good business sense must prevail over 

political expediency.

Arun Pasricha  New Delhi

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