For every divestment by govt, there is investment by LIC | Business Line

For every divestment by govt, there is investment by LIC | Business Line


funds’ management
This refers to the report
“For every divestment by govt, there is investment by LIC” (The Hindu Business
Line, December 2). This brief, but well-researched analysis, based on authentic
information, should be taken forward with further debate about public funds
management in general. For historic reasons, GOI has been able to retain the
management of funds with statutory bodies and to some extent even bank
deposits. This is a healthy feature and has saved the country from financial
sector turmoil of the kind faced by emerging economies in recent times.
But, there are some
unhealthy practices followed by government in regard to management of public
resources including finance, which, if not corrected at this stage of economic
development can invite future trouble. To be specific, they relate to the
assumed ownership rights being exercised by finance ministry in regard to
nation’s savings.
It is in this context, we
have to view the transfer of resources from organisations like LIC or EPFO to
organisations in private sector or use of legislation to create captive sources
for funding public debt with caution. Gradually, GOI should try to make their
own transactions market-related and institutions like LIC, EPFO and banks
should be guided to manage their funds efficiently on par with their
counterparts in the private sector.

G Warrier
, Mumbai


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