Finance Minister Nirmala Sitharaman announced that
the Initial Public Offering (IPO) of Life Insurance Company (LIC) will be out
in the financial year 2021-22, in the Union Budget 2021-22.

The required legislative amendments will be
launched in the Parliament in the Budget session. The government has planned to offload 25% of its stakes
in LIC through multiple tranches.

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After the IPO is determined, prime focus should be
on finding out LIC’s embedded value. After this, the insurer will have to
reduce its stake to less than 15% in other listed companies. After this, the
LIC Act will be amended in the Parliament. An actuarial firm is yet to be
appointed by the government to determine LIC’s embedded value.

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Before the IPO is declared, LIC can increase its
embedded value if it is able to cut off its stakes in IDBI Bank. This would
also increase its value in the market.

Sitharaman also announced disinvestment in
non-strategic investments. There was pre-budget talk related to privatising a
number of companies in energy, mining and banking, apart from selling a
minority stake in large entities like LIC.