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LIC IPO: Russia-Ukraine war heightens tension, government may miss disinvestment target for the second time in 8 years

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new Delhi. The Russia-Ukraine War has increased the tension of the Indian government. Due to this war, India is going to miss its revised disinvestment target by a big margin for the second time in the last eight years. The government’s plan to raise 60,000 crores from the IPO of Life Insurance Corporation of India (LIC) is likely to be in jeopardy.

This will be the second time for the government to miss the disinvestment target since coming to power in 2014. Earlier in 2019-20 also, the government had missed the revised disinvestment target of 65,000 crores. Only 50,304 crores were raised that year.

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78,000 crore target

In the current financial year, a revised target has been set to raise 78,000 crores from disinvestment. So far the government has been able to raise only 12,400 crores. 2,700 crore from the sale of Air India and Rs 3,994 crore from the stake sale in Axis Bank.

market volatility

In view of the turmoil in the stock markets due to the deepening of the Russia-Ukraine war, the government may postpone this IPO for the next financial year. If this happens, the disinvestment target will remain incomplete. Stock markets have been volatile since Russia’s attack on Ukraine. The government is worried that if the IPO is brought in such a situation, it may not get favorable support from investors. Due to this, the amount that the government will get from its stake sale may be less than expected.

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IPO may be postponed

Arijit Malakar, Head of Retail Equity Research, Ashika Group, said that the current geo-political tension between Russia and Ukraine is affecting the global equity market. This has also led to a fall in the Indian markets and it has seen a correction of about 11 percent from the highest level ever. Thus, the market volatility at present is not favorable for LIC IPO and the government may postpone this IPO till the next financial year.

Tags:, LIC IPO

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