It looks like we are in a season of high-level exits from government owned or backed institutions. Late on Wednesday, it was reported that S K Roy, the chairman of government-owned insurer the Life Insurance Corp. of India (LIC) had unexpectedly quit, two years ahead of his scheduled departure.
Interestingly, Roy’s resignation comes at a time when LIC has been under the scanner for its curious stock market operations, as also for the huge defaults on its books. In April, it was reported that borrowers had defaulted on more than Rs. 65,000 crore lent to them by the insurer, by way of debt instruments like bonds and debentures. Further, not only is LIC the second largest investor in government banks, it has also been mopping up shares in several public sector banks such as IDBI Bank, Dena Bank, Allahabad Bank, Bank of Baroda and Indian Overseas Bank, some of which have been under pressure on account of non-performing assets.
The unlisted LIC has, in fact, bailed the government out on several occasions in the last few years by buying shares of public sector companies, when it has found tough to meet its disinvestment targets. One such case was the divestment of Indian Oil Corp. Ltd in August 2015, when LIC bought almost nine-tenths of the refiners shares on offer just to salvage its Rs. 9,000 crore share sale.
While the reasons for Roy’s sudden resignation were not immediately clear, it follows the announcement by Reserve Bank of India (RBI) Governor Raghuram Rajan that he would return to the academia after his three year term at the central bank ends in September this year. Rajan’s decision to not seek an extension comes after Bharatiya Janata Party leader and member of Parliament Subramanian Swamy levelled several allegations against him. Swamy had, in at least two separate letters written to Prime Minister Narendra Modi, asked the government to sack Rajan, for “wilfully and deliberately” wrecking the Indian economy and compromising national security, among other things.
Incidentally, on Wednesday Swamy demanded that Arvind Subramanian, the Chief Economic Advisor (CEA) be sacked, too. He alleged the latter disagreed with several government policies including the one on Intellectual Property Rights. “Such people who can fail our government, such people should be tossed out. Now, it has been two years. He (Arvind) used to work in America, don’t even know if he’s a citizen or not but I’m sure he has a green card (sic),” Swamy reportedly told news agency ANI.
Subramanian was appointed the CEA in October 2014, and had succeeded Rajan in the North Block.
Unlike in Rajan’s case where both Modi and his finance minister Arun Jaitley had chosen not to comment directly, on Wednesday, Jaitley said that the government had complete faith in Subramanian. “The government has full confidence in the CEA. His advice is of great value,” Jaitley said at a cabinet briefing.
Following this, Swamy, on Thursday tweeted that he will "suspend" his demand for sacking the CEA, if the government thinks that he is an asset, and will “wait for events to prove truth (sic).”
(Aman Malik is Senior Assistant Editor at VCCircle.)
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