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Ukraine crisis: War may delay LIC initial public offer

Centre to give priority to managing fuel prices which are likely to jump soon
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R. Suryamurthy   |   New Delhi   |   Published 02.03.22, 03:00 AM

The fallout of the Russia-Ukraine conflict may delay the IPO of Life Insurance Corporation of India to the next fiscal.

The Centre is exploring the possibility of shifting the mega LIC public offer as it gives priority to managing fuel prices which are likely to jump once the election results to five states are announced on March 10.

The war in Ukraine has pushed crude prices above $100 per barrel, and the Centre needs to manage the excise duties of petrol and diesel even as the stock market turns so volatile that it could scupper the prospects for the LIC flotation.

“Ideally, I’d like to go ahead with it because we’d planned it for some time based purely on Indian considerations,” finance minister Nirmala Sitharaman said in an interview with Businessline “But if global considerations warrant that I need to look at it, I wouldn’t mind looking at it again,” she said.

Economists said the government is toying with the idea as its revenue collection has been buoyant and the shifting of the stake sale would give some room to cut excise duties on petrol and diesel. The revenue loss could be made from the IPO next fiscal when conditions improve.

Aditi Nayar, chief economist, Icra, said “a modest upside to the GoI’s net tax revenues in FY2022 compared to the RE (Revised Estimates) level, and an undershooting of capex, which will help to absorb any shortfall in disinvestment receipts, in the event that the inflows from the LIC IPO do not materialise within this fiscal”.

“Moreover, CGST revenues are likely to exceed the Government of India’s FY2022 RE by up to Rs 0.3 trillion, complementing the anticipated overshooting in direct taxes.”

With buoyant revenue collection, some top economists said the government should postpone the LIC IPO to the next fiscal as it faces the challenge of balancing inflation and growth in FY23.

Life Insurance Corporation on February 13 filed a draft red herring prospectus with Sebi for the sale of a 5 per cent stake by the government .

Oil from reserves

All 31 member countries of the International Energy Agency have agreed to release 60 million barrels of oil from their strategic reserves — half of that from the United States — “to send a strong message to oil markets” that there will be “no shortfall in supplies” after Russia invaded Ukraine, the group said Tuesday, according to AP.

The board of the Paris-based IEA made the decision at an extraordinary meeting of energy ministers chaired by US energy secretary Jennifer Granholm. Russia plays an outsized role in global energy markets as the third-largest producer. Its exports amount to about 12 per cent of the global oil trade.

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