Wednesday, October 31, 2012

“Differential lending will facilitate food security...”

Farm credit industry has seen transformation, but changes are on the way

Currently, farm credit is being delivered, besides informal money-lenders, by institutional agencies viz. commercial banks, Regional Rural Banks and Co-operatives. The money-lenders supply a little less than half of the total borrowings of farmers mostly for consumption purposes including conspicuous consumption. The share of private local area banks is yet to assume significant proportion in farm credit. There are also recently entered micro-finance institutions (MFIs) and their numbers have been proliferating. The high rate of interest ranging from 15-50 % charged by the MFIs generally make them unsuitable for farm credit as the average rate of return on investment in agriculture may be around 15-20 %. More recently, the emergence of corporate finance, primarily in financing agri-machinery has been observed. Of all sources, institutional credit, is still the predominant source of credit.

By virtue of a central government mandate, the credit flow to agriculture more than doubled from Rs.869.8 thousand crore in 2003-04 to Rs.2.29 lakh crore in 2006-07. This reflected the view that farm credit is indeed productive. But in 2008, the same government announced a Debt Waiver and Debt Relief Scheme writing off loans worth Rs.73 thousand crore. This implied ex-post sterility of farm credit.

The biggest challenge before farm credit from institutional sources has always been the increase in outreach, i.e. timely availability of farm credit in adequate amount to a large section of disadvantaged farmers. Right from the time of independence, institutionalisation of farm credit has been the prime objective and yet in practice there is a tardy process lingering on the exclusion of a large number of small, marginal and sub-marginal farmers. Credit also has a strong tendency to perch on where it is relatively safe and shy away from the risky rainfed regions that constitute around 60% of the total cultivated area. Since most of the farmers currently borrowing from financial institutions are located in irrigated areas, the challenge before institutional credit is to increase its outreach in the rainfed and dry regions in keeping with the technological leverage in these areas.


Source : IIPM Editorial, 2012.

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Tuesday, October 30, 2012

Singapore, here we come!

Comparisons of national GDPs with respective salaries of heads of state reveals some interesting facts

Much is being discussed and debated on the issue of who gets to decide on the CEOs’ remuneration in a listed company. This is true especially in US, where shareholders felt cheated by the recession and excesses by CEOs; both in terms of pay and in the way they took excessive risks to take their companies, and shareholder wealth, to newer lows. So if it’s all about taking accountability to the highest level, it does make sense to look at remunerations of the ultimate CEOs – the heads of state. After all, their role is far greater than any of the corporate leaders.

Voters in a democracy don’t exactly have a say on what their head of state gets, in fact, many of them may not have even seriously considered that an issue. But then, is there a pay to performance link at work? We decided to check for a correlation between remunerations of some heads of state with GDP performance of their respective nations; and came up with some interesting revelations.

To start off, the US shows greater parity. The concept of compensating the President took shape during 1790s in the US. In as early as 1789, the basic salary of the US President was $25,000 annually, the value of which in 2009 dollars is $566,000 when the GDP of the country was over International $527 million (the currency being used at that time). Exactly 84 years later, in March 1893, the basic salary of the President was doubled to $50,000, value of which in 2009 dollars is $865,000, while the GDP of the economy grew by 187 times. Salary was again hiked in 1909 to $75,000, the current value of which is an astonishing $1,714,000; even as the US became the second largest economy of the world after the UK, with a GDP of International $517.38 billion. The salary was revised to $100,000 in 1949, even as US became the largest economy of the world with a GDP of about International $1,456 billion. The salary was further raised to $200,000 on Jan 20, 1969; while the size of the economy nearly doubled. And when the basic salary was given its final boost – to $400,000 on Jan 20, 2001, the size of the economy increased to $10.29 trillion. Since then, the economy has not done quite well, with the current GDP at $13.84 trillion, and interestingly, the basic salary of the President has remained the same.


Source : IIPM Editorial, 2012. An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
 
Zee Business Best B-School Survey 2012
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IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
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Monday, October 29, 2012

Temptation island!

Bali is a land of surprises. This small little wonderland is choc-a-bloc with gifts of nature, culture and heritage for its visitors. For those who are blessed to call it home, Bali is heaven and offers beaches, both virgin and popular. Bali’s rather small size doesn’t limit the variety of options to those who like to explore. Ranging from cultural dance performances to exquisite relaxing beaches, Bali has it all. Although its surface area permits you to drive around the entire coastline in just a day, you would cherish every bit of this exquisite drive, which would be a part of your sweet memories forever…!

Once in Bali, based on personal preferences, one could opt for a place to stay either in the hip and happening town of Kuta or in a place like Seseh, which is quietly nestled in the Southwest of Bali and is slightly out of town. The benefit of a vacation at Bali is that if you are looking for serene surrounds and peace of mind, one could live at a villa in the suburbs and unwind whilst also being able to cover as much ground as required for site-seeing and indulging in all sorts of activities. Visiting Museum Le Mayeur for the art lovers is a must. It was the Belgian artist Adrien Jean Le Mayeur’s house of antique carvings which became a museum. He married the renowned Legong (classic Balinese dance) dancer Ni Polok when he was 55 and she was 15. This museum tells tales of their love, travels and more. A truly beautiful temple, Pura Ulun Danu Bratan was built in the 17th century and is an important Hindu-Buddhist temple dedicated to Dewi Danu, the goddess of the waters. It forms a breathtaking silhouette against the backdrop of the misty mountains and is also one of the most frequented sites. Other than museums, picturesque beaches, mesmerising dance performances and enchanting temple ceremonies, Bali has a fabulous night life as well. Give a rush to the party animal within yourself and shop until you drop at Seminyak, which is host to the best night life and shopping experience on the island of Bali.

 
Source : IIPM Editorial, 2012.

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Sunday, October 28, 2012

An inorganic research

It’s almost fashionable to eat organic food, but a new research in UK attempts to crop the growth of the organic food movement...

Right from their school days, Indians have been taught about the Green Revolution that swept across the country in the 60s and 70s and how it revolutionised the way farming was done. By using synthetic fertilizers, pesticides and modern, high-yield seeds, farmers were able to swiftly multiply their production and presto, it had turned out to be the boon Indians had long been praying for! Except, as years went by, farmers began to suffer from respiratory problems, memory disorders, dermatological conditions etc. due to contact with or inhalation of the insecticide sprays. Pesticide residues began to be found in the systems of people, and some pesticides were found to even be potent enough to do serious damage to a child’s nervous system. It is of little wonder then that both farmers and consumers have steadily been taking a U-turn and going back to naturally cultivated ‘organic’ food. So when London School of Hygiene and Tropical Medicine (LSHTM) recently took out a paper which said, “...there are no important differences in the nutrition content, or any additional health benefits, of organic food when compared with conventionally produced food,” people in support of the organic movement were left aghast, while companies involved in making fertilisers, pesticides and the like cheered.

“Anything which is polluted, has to have a problem,” says MD & Global CEO of Organic India, Mr. Krishan Guptaa. “Recently, I was in Malihabad, which is in Lucknow, and it is where we grow Dussehri mangoes. The first thing a farmer told me was, ‘Sir, we were very happy 20 years ago, till the time we were not using any sprays or insecticides on our plants.’ They say they started spraying once and after some years they had to spray twice, and now they have to spray at least four times to keep the crop protected. They were saying that in cattle there were problems, in the water there are problems, and when they are spraying this stuff they are inhaling all the problems! This is why they have to be on regular medicine.


Source : IIPM Editorial, 2012.

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Friday, October 26, 2012

Lighting up the twilight years

Senior citizens are increasingly enjoying sex into their 80s…

They say time is a great healer, the same holds true for sex, used by many sexual healing therapists; but what happens when these two healing powers come together? The reference here is to old-age sex! It has been observed that senior citizens of today are not shying away from some between-the-sheets action. And this has been confirmed by a study conducted by the University of Chicago that finds a mention in The Journal of Sexual Medicine.

The survey conducted between 2005-2006 involved face-to-face interviews with 1,550 women and 1,455 men in the comfort of their homes. The results were encouraging, if not impressive, with 68 per cent men agreeing to having had sex in the past year with women following not too far behind at 42 per cent.

While these are the trends in the sexually-liberated west, what about countries like ours where sex is spoken of albeit in hushed tones? “Indians have been active since time immemorial, in fact, sex is the only “indoor sport” for majority of (old) people that they can enjoy and afford,” says India’s leading Sexologist, Prakash Kothari. In fact, he is quick to add, “In India, more than 50 per cent of the 65+ population would be enjoying sex at that age. In fact, most senior citizens are more active than the youngsters”.


Source : IIPM Editorial, 2012.

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This is what the editor-in-chief vehemently demanded just recently!

How Kidar Bansal adamantly refused to bribe corrupt AICTE officials and faced torment for years before the wrongdoers were finally trapped by the CBI.

It was a hot and humid morning on July 17, 2009 when Kidar Bansal was playing around with some files in his office. Within moments of picking up the ringing telephone, Bansal breaks into a broad smile and spreads his arms in a gesture of victory and vindication. The call was from a newspaper reporter who gave him delightful news: The CBI has raided the offices and homes of many top officials of AICTE. He almost breaks into a jig when he gets to know more details. The CBI has arrested Member Secretary Narayan Rao and middleman S.B Subbarao; catching them red handed taking bribes. It gets even better for Bansal. The CBI has also registered an FIR against AICTE chairman R.A Yadav, Deputy Director Ravindra Randhawa, advisor S. C Rai and Regional Officer Om Dalal. Bansal, who runs the Echelon Institute of Technology in Faridabad, claims that it is these very men who have been tormenting him for years. His crime? Bansal refused to pay any bribes. Now vindicated, Bansal hopes that the CBI raids are just the beginning of the process to destroy and stamp out the hopelessly corrupt AICTE which specializes in punishing honest entrepreneurs and rewarding the crooked ones.

There are dozens like Bansal who had virtually given up any hope. That is because they knew that R.A Yadav and his cronies enjoyed such political patronage that they could behave brazenly and get away with it. In fact, Bansal now recalls meeting even Rahul Gandhi and pleading with him to help stop AICTE officials using professional education as a personal milch cow. Bansal is not aware of the details; but his adamant refusal to pay bribes started bearing fruit when Kapil Sibal replaced Arjun Singh as the Union Human resources Development Minister. From day one, Sibal was determined to cleanse the rot. And he did sign a file on June 26, 2009 which enabled to trap the corrupt gang at AICTE.


Source : IIPM Editorial, 2012.

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Wednesday, October 24, 2012

Engineers to politicians

From engineers to politicians, everyone’s signing up for finishing schools!

Understanding the psychology of a person and inferring why a person behaves in a certain manner is essential in order to correct undesirable mannerisms. Psychology is an integral part of personality grooming and Ms. Warrick says, “Just because some people are page three personalities, it doesn’t mean they can open a finishing school. You can’t be an engineer without attending school. Similarly, you can’t be in a finishing school without going through the grind yourself. You need to be certified, and lastly it is essential to be bilingual.”

It was once said that “no one is perfect… that’s why pencils have erasers.” But on the contrary, pencils also have sharpeners, which help us to write better and neater. Character building and personality development begin from childhood and continue until our death. “It’s beauty that captures your attention; personality which captures your heart.” And if until now you don’t know how to greet a woman or raise a toast… then the goblet of knowledge is indeed empty my friend...!


Source : IIPM Editorial, 2012.

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Monday, October 22, 2012

‘Thin’ tanks

Are Indian think tanks a farce?

Even though India is one of the first countries outside Europe and North America, where modern universities have been created (University of Calcutta was established in 1857), it has failed to create an education system par excellence, comparable to the best of the world. Even China’s performance is much better than India. The country has created world class universities like Tsinghua, Fudan and Beijing.

Equally alarming is the quality of think tanks in India. The inputs that have been received from our think tanks by the policy makers over the years have been mooted with contentiousness and indecisiveness. Albeit the fact that there are 122 think tanks in India, only a little more than a handful of them are of quality. Centre for Civil Society, Centre for Indian Political Research and Analysis and Centre for Policy Research are some of the best, although each of them functions in their specialised area of interest.


Source : IIPM Editorial, 2012.

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Sunday, October 21, 2012

Contracting animal diseases

Breed them, feed them and then eat them – contracting animal diseases frequently might just be their way of getting back at us…

It shook the world when 40 million people died. In Spanish Flu, pneumonia doesn’t even get the time to establish itself and the patient dies of the virus within hours of contracting it. The virus causes an uncontrollable hemorrhaging that fills the patient’s lungs with his own body fluids.

If one observes keenly, there are certain peculiarities about these outbreaks, about the kind of victims as well as about the recurrence of such virus attacks. While the Spanish flu presented an unusual preference in its choice of victims – young, healthy adults instead of those with weak immune systems – the origin of the ailment is considered to be in the Eastern world. Again, an entirely new variety of human influenza, ‘Chicken Ebola,’ surfaced in the human population of Hong Kong in 1997. It was then that Hong Kong’s entire poultry population (ducks, geese and chickens) was slaughtered. SARS or bird flu also started among the Orientals and culling of several poultry animals was done to avoid it from gaining pandemic proportions. As far as the recurrence of these influenzas is concerned, influenza experts remind that aquatic birds maintain all the genes of all influenza viruses in the world and they transmit it to other species periodically. Even if these viruses are very ancient, they still have the capacity to evolve, to acquire new genes and new hosts. So, chances of such troubles hitting mankind again can’t be ignored.

While the 1918 Spanish flu took its toll in the pre-penicillin era, new types of viruses always pose a threat. It is quite clear that breeding farms for poultry and pig are the breeding grounds for such viruses. Well, the increased frequency of recurrence of such influenzas in the past one decade could be nature’s way of telling us that culling humans isn’t as difficult too!


Source : IIPM Editorial, 2012.

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Friday, October 19, 2012

Suicides by contagion!

Now that’s not merely bone-headed – that’s fatal too!

Suicides in the1930s were commonplace. When the Great Depression was wreaking havoc in the West, Japan’s timely economic primping stood her in good stead. Alas, it was not of much consolation to Kiyoko Matsumoto. “Bewildered to distraction by the perplexities of maturing womanhood”, as the college-going Kiyoko had confided to a friend, she found recourse in ending her life, which she managed by jumping right down the mouth of the gurgling-with-lava Mount Mihara in the volcanic Izu Islands of Japan.

That was Feb 11, 1933. What followed in merely two years were “350 known suicides and 1,386 attempted suicides,” as highlighted in a January 1935 issue of Time magazine, in an article reporting yet another incident of three persons, out of the crowd of sightseers gathered, leaping into the crater that week. Like a suicidal herd-instinct gripping visitors as they entered the confounded site, apparently ‘normal’ tourists were reported to have lunged in, as though Death irresistibly called out from the broiling bowels of the earth! Even more bizarrely, the owner of the private steamship company that provided transport to the Point, not only created publicity campaigns around the idea of watching a deathly spectacle unfold, but also procured official sanction for issuing round-trip tickets to the site claiming to ensure visitors returned!


Source : IIPM Editorial, 2012.

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Thursday, October 18, 2012

A coup de grâce

The paper that failed to adapt to the times

Amrita Bazar Patrika, like the freedom fighters, played a very important role in the country’s Independence. Launched in 1868 by Sisir Kumar Ghosh, the bilingual (English and Bengali) weekly soon became the apple eye for the masses and a pain for the British government. It became a full fledged English weekly in 1878. In 1891, Amrita Bazar Patrika became a daily newspaper and quite a revolutionary one. At the onset of the twentieth century, the newspaper kept igniting the Indian junta as the fight for freedom gathered pace and even post-independence. But they went into problems in the 1980s as the era of colour, entertainment, aggressive marketing and more coverage of social trends came in. They failed to adapt with the changing times, thinking that the brand would continue to carry them forward and thus lost audiences to new competitor Telegraph. This affected their financial health. They raised huge debts but failed to revive the paper and closed down in 1986. “The biggest blunder that Amrita Bazar Patrika did was that they suffered from the Ostrich in the sand syndrome.


Source : IIPM Editorial, 2012.

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Wednesday, October 17, 2012

Recall & Repeat

It’s more like freeway. Come & go

Recall of candidates, be it elected or appointed, often creates mayhem, controversies and chaos among the populace particularly in a democratic setup. Norms and propriety notwithstanding, it continues unabated even in the best of democracies to honour the wishes of the people, and also to often settle personal score and vendetta. One cannot deny the pedigree of United States as a pioneer of the democratic system. Unlike in many developing nations, the recall in the US is a rarity (not permissible in most of the states) or if at all, is done through ballot papers of the electorate. Gray Davis, the Governor of California was unseated by popular mandate and the same elected Arnold Schwarzenegger for the job in 2003. Gray Davis was ousted by a margin of 55.4% to 44.6%. On the other hand, a court in Michigan dismissed a petition to sack a Republican candidate Walberg on the ground that laws of the state does not permit to axe an elected member of Congress. However, back home recall of candidates is rarely done through popular consent, but by unilateral decision of the party and the government. Most conspicuous example of that was the unceremonious recall of Dayanidhi Maran by the party provost M Karunanidhi, stripping him of his ministerial designation. In another instance of party’s influence over its appointed representatives is the recall of Somenath Chatterjee from his Speaker’s post when the Left withdrew support from UPA Government.

An unprecedented move was taken in National Electoral Council of Venezuela, which accepted the demand of recalling 28 governors, mayors and congressmen in 2007. Recall is and has always been there to weed out corruption.


Source : IIPM Editorial, 2012.

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Tuesday, October 16, 2012

Alright, Hallelujah! What next?

How religious leaders can help the world for its betterment

A close scrutiny exemplifies the fact that be it the Pope in Christianity or Dalai Lama in Buddhism, Rabbis in Judaism or Imams in Islam, religious leaders do all have implicit and explicit influences in the lives of even non-devotees.

To start off with, Pope Benedict XVI. Given the current global scenario, each of the Pope’s visits, addresses to the common people, official statements marks history. For instance, his mind-boggling address to the youths of Germany, inter-faith talks with Jews and Muslims and many other similar visits to Brazil, Austria, Poland, Spain, Turkey and the US have been overwhelmingly successful in garnering more international attention than his religious designation should warrant.


Source : IIPM Editorial, 2012.

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Monday, October 15, 2012

A growing family!

The onus of transforming Godrej is on GenNext & professionals

Last year was image makeover time for one of the most respected business houses of India, as the 113-year-old Godrej Group was perceived as being quite slow footed as compared to the competition. But when you consider recent developments, one gets the feeling that Godrej is not content with a change of image alone. Clearly, Adi Godrej and his senior management team have realised that the 23,000-strong Godrej ‘family’ has to be more tactful, aggressive and ‘with the times’. And change, as they say, starts at the top. That is why the recent changes in the top management in the company merit a discussion.

Interestingly, these changes are being implemented on the strategic tie-ups that Godrej has entered into. Godrej Sara Lee (GSLL) and Godrej Hershey’s (GHL) will now be managed by a team of senior executives coined as the ‘FMCG cell’, which will be headed by A. Mahendran. And to ensure double digit growth, these companies are being spearheaded by industry veterans; for instance, Vivek Mathur is now MD, Godrej Hersheys Ltd.

Professionals have handled core businesses of Godrej in the past as well; but in those times, it is alleged that the family called the shots. This has been cited as the reason behind earlier ‘heartbreaks’ with P&G and GE as partners, which led to lost opportunities in the FMCG and the white goods segment respectively. However, Chairman Adi Godrej vehemently denies the same in an exclusive e-mail to B&E, “Each of our businesses has been run by non-family professionals for many years.” Further investigation does reveal that Adi’s claim is credible.


Source : IIPM Editorial, 2012.

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Sunday, October 14, 2012

Stuck in the Indian web!

After Cho’s failure to get the Orissa project up and running, Posco must look for an Indian CMD

A to-let signboard is hanging out side his rented house near Forest Park, his memorable words are still alive in the minds of his employees, but good ol’ Cho is not here to resound his words again. Soung-Sik Cho, the former Chairman-cum-Managing Director (CMD), POSCO India Private Limited (based in Orissa), a subsidiary of POSCO, has quit the coveted job out of the blue.

Indian business dynamics have often proven the nemesis for many globe trotting multi-national conglomerates. Failure to solve the riddle of the Indian work culture, government policies, people’s mind-set, et al has compelled many to give up on their ‘India’ dreams. Thus the obvious question that arises in corporate circles considering Posco’s travails in India so far, is whether Cho is the latest victim to succumb to the enigmatic Indian business environment?

Cho had been in the state since his company inked a MoU with the Orissa government for setting up of a 12 mtpa steel plant near Paradip with a whopping investment of Rs.510 billion (considered as the biggest FDI in India). “I hope we can swim with the positive tide and move closer to the shore with every stroke. If we diligently pursue our targets I am sure we can get our project well on its feet before this year end,” Cho had optimistically said to his employees on the occasion of the fourth foundation year of POSCO India on 23rd August 2008.

Optimism has been a scarce commodity, though, for Posco. The world’s third largest steel producer has been facing problems of all kinds from the very onset of its Indian journey. Currently reeling under delays in starting construction of the $12 billion plant, Asia’s biggest steelmaker by market value has been plagued with various issues, from irked environmentalists to tussles with the Oriya government over various land usage disputes. All these stand testimony to the South Korean steel makers’ India predicaments. Cho, who had earned name and fame across the globe for his acumen in setting up greenfield projects, was bestowed with the responsibilities of POSCO-India in 2006 to solve persisting problems, apart from ensuring smooth implementation of its various projects.


Source : IIPM Editorial, 2012.

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Friday, October 12, 2012

WORLD: TRANSITION OF POWER

Who would’ve thought that the Third World would get to see this day

Not very strangely, the US and its allies are not in that comfortable a position to offset the additional amount after being severely affected by the global recession. Tier talk even goes of the US ‘guiding’ IMF towards Third World countries for its new loan requirements.

The hope of a more democratic and participative world where today’s influential countries are not necessarily the deciders of global policy, is becoming truer, strangely because of an extremely negative economic condition. The true emergence of multi-lateralism would perchance be proven only after the next few years are past and the IMF & World Bank’s cry wolf constitutional change is tested to the hilt. Till then, let them damn the recession!


Source : IIPM Editorial, 2012.

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Thursday, October 11, 2012

CPI(M): KERALA

CPI (M) is caught in an unsavoury fight over corruption in Kerala  

Things got so hot that the CPI(M) secretary general Prakash Karat himself had to broker a truce – with polit buro ratifying Vijayan’s conspiracy theory while issuing gang orders on Achutanandan. Citing CBI’s stringent indictment by the Supreme Court for frequently changing stance in Mulayam Singh Yadav’s disproportionate assets (DA) case, Karat said, “The Central government is fabricating a case against Vijayan only as a vendetta against our decision to withdraw support to it in wake of Indo-US nuclear deal. Looks like, the government hasn’t learnt from the court’s strictures against it in the Mulayam Singh case”.

There are no winners in this battle between the CPI(M) leaders, at least in the CPI(M)! With general elections so near, CPI(M)’s 'teflon-coated' image is likely be dented heavily.


Source : IIPM Editorial, 2012. An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.

Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri - A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
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IIPM Global Exposure
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Wednesday, October 10, 2012

LIC: INVESTMENT

LIC’s market investments are well timed, apart from IRDA norms
 
The investment may seem to be huge, but considering the Rs.8.06 trillion asset portfolio of LIC, out of which it is entitled by IRDA norms to invest 35% in equity along with mutual funds, corporate loans, FD, et al, the investment amount is reasonable enough.

A simple evaluation shows that out of the 35% allowed in equity et al, even after Rs.170 billion investment in the equity market, LIC would still have a surplus of Rs.2.6 odd trillion, which it can utilise for corporate loans and fixed deposits. In addition, LIC is all set to raise its fresh premium income by around 40% in FY ‘10 from the current Rs.110 billion (thanks to PSUs, which are expected to raise gratuity liability cover from Rs.0.35 million to Rs.1 million). Of the promised investment amount, Rs.40 billion would be infused by the end of March 2009. LIC has equity investment of about Rs.2 trillion in listed entities.

The only hurdle which LIC could face is from the IRDA (Insurance Regulatory & Development Authority), which caps the firm’s exposure in individual firms at 10% (LIC’s stake in several companies exceed the limit) earlier the limit was 20% (down from 30%). LIC has exceeded the limit and it will have to lobby with the IRDA to relax investment norms (as it has done for infrastructure companies). Apart from this bolt from the regulator, LIC’s aggressive investment in the bourses seems logical and well timed. That should be a boon for policy holders who have gone for equity linked plans.


Source : IIPM Editorial, 2012.

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IIPM : The B-School with a Human Face

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