ridden cheapmoncler govt makes more claims on LIC
MUMBAI (Reuters) With more than a quarter of a billion customers, the Life Insurance Corporation (LIC) of India has once again dug into its pockets cheap moncler jackets to prop moncler outlet store up its financially strapped owner.
An employee counts rupee notes at a cash counter inside moncler usa a bank in Agartala, December 31, 2010. REUTERS/Jayanta Dey/Files
LIC has bailed out the government before. It bought shares in state owned banks in 2009. In 2010, it bought the government stake in a mining firm. This time, it is injecting a billion dollars into some state banks. It has also bought out part of the government stake in an oil firm. Analysts believe the government sold them at a uk moncler sale 5 to 7 percent premium to the market price of 283 rupees. The shares were trading at about 282 rupees on Tuesday.
Holders of LIC 300 moncler online store million insurance contracts possibly know moncler sale outlet that the cheap moncler jackets womens insurance firm might have lost 25 percent of the value of its investments so far in government owned businesses.
The situation is also eerily familiar for millions of investors in India first mutual fund, the cheap moncler jackets mens US 64. The fund collapsed after the state sponsored manager, the Unit Trust of India discount moncler jackets (UTI), took heavy losses on its investments, including those in other state owned units in the 1990s.
And yet, reactions are muted in a country where the government fiddling with the accounts of businesses it owns is par for the course.
the government wants to moncler outlet woodbury use the state owned companies to fund its capital raising programmes, then these companies can financially turn weak at some point of time, said Deven Choksey, chief executive of Mumbai based brokerage KR Choksey.
can be a dangerous proposition for the country as a whole.
NO SLEEPLESS NIGHTS Beyond raising eyebrows, though, the risk that the firm entrusted with providing basic insurance for millions moncler outlet prices of Indians could moncler sale online suffer cheap moncler outlet massive losses is giving no one sleepless nights.
On the contrary, observers find such risks are a small price to pay for the safety afforded by India unique model of state capitalism. The government owns a majority stake in the country biggest banks, oil firms and the biggest players in the resources sector.
The government long reluctance to reduce its stranglehold on the financial sector has meant two things: government debt is massive, equivalent to more than 70 percent of the economy, and the interbred government sector is trapped in a complex and opaque web of unhealthy cross holdings.
The system has its fans, particularly after the 2008 Lehman collapse and then the European moncler sale debt crisis, which felled institutions across the developed world. India banks stood strong through both crises.
The government has also played godfather when necessary. It stepped in when UTI floundered in 2002, facilitating a deal that ensured investors could trade their worthless moncler uk outlet units in the fund for bonds. It is in the process of bailing out a state airline.
State owned loss making airline Air India, which employs 28,000, is getting $4 billion worth of debt restructured by government owned banks. Ailing private airline Kingfisher isn going to be that fortunate.
When the world is in a crisis, is difficult to argue that this particular form of financial repression or regulation which the government has adopted as its way of keeping the Indian financial system safe doesn work, said Jahangir Aziz, chief Asia economist at JPMorgan.
NEXT GENERATION PROBLEM? In LIC case though, the question of the soundness of these investments is somewhat irrelevant, simply because the moncler outlet sale company won run out of funds for many, many years.
With assets of $300 billion, one fifth of India economic output, LIC will continue cheap moncler sale to rake in more in insurance premiums from a young and untapped population than it pays out in claims for several more decades.
A man uses an electronic machine to check a rupee note at a money exchange shop best moncler jackets in Siliguri February 5, 2008. REUTERS/Rupak De Chowdhuri/Files
The government, meanwhile, is struggling to contain its fiscal deficit as it foots a massive bill for a populist agenda that includes fuel subsidies, food handouts and guaranteed rural wages.
The budget for cheap moncler coats mens the year ending March 31 provided just 600 billion rupees to recapitalise banks. The largest bank, the State Bank of India, alone needs 80 billion rupees to meet a minimum tier 1 capital adequacy requirement of 8 percent by month end.
For all the arm twisting by the government, LIC investment income has grown exponentially, from about 322 moncler womens jackets billion rupees in the fiscal year that ended March 2006 to 777 billion rupees five years later.
Some of the investments the insurance firm was asked to make in banks have swollen handsomely. The 24.4 million shares LIC bought in the State Bank of India in the first quarter uk moncler outlet of 2009 have risen by about 60 percent to date, even if one assumes they were bought at the peak price of 1,376 rupees in March 2009.
Likewise, it bought 3.23 million shares of Bank of India to increase its stake in early 2009. There been a gain of more than 40 percent on that investment.
So, in some respects, LIC is different from the UTI case which then nearly claimed a prime minister and a finance minister.
Yet, there are moncler outlet legitimate issues around the propriety of a system that allows its government to put its hand in the public sector cookie jar this frequently.
you ask LIC to put in money into ONGC at a price which is ridiculous, it is certainly putting money into bad use, said Arun Kejriwal, a strategist at research firm KRIS. should have a right to challenge moncler outlet online that.
The sovereign regularly ignores its corporate governance rules on how the promoter of a firm can use its spare cash, and its actions often run counter to both public interest and the profit motives of its companies.
