LIC IPO: How is it the biggest privatisation scam in India? Interview with V Sridhar, member of the People’s Commission on Public Sector and Public Services Sarah Thanawala·May 13, 2022 https://theleaflet.in/lic-ipo-how-is-it-the-biggest-privatisation-scam-in-india/
The life insurance business was historically and typically structured as a mutual company where profits that arose were distributed amongst the shareholders; there was no appropriation of profits by an external source.
However, after the changes introduced in the Finance Act of 2021, the government has asserted its rights as a shareholder. These changes were introduced explicitly in order to help it divest its “stake” in the LIC. Prior to the 2021 amendment, 95 per cent of the profits from the consolidated corpus, including profits from non-participatory policies, were distributed to the policyholders. However, the amendments take these surpluses away from policyholders and transfer them to the shareholders, including the new shareholders after the IPO.
In effect, policyholders provided the risk capital for the LIC’s expansion for most of its life.