I do hope that very soon all of us come together and build a movement, a stronger movement, a powerful movement in the financial sector to defend the national economy and defend the interests of vulnerable sections of the people, and build a society which is just, fair and equal for everybody.
Text of the speech given by Com. Amanulla Khan, ex-President of All India Insurance Employees Association (AIIEA) at the AIFAP meeting – Unite Against Privatisation – “Current Ongoing National Struggles to Oppose the Privatisation of Banks, Insurance and Coal Mines” held on 19th December 2021
We are seeing a situation where there is a huge attack on the financial sector and this attack became much more pronounced after 1997 when India signed and became a part on the general agreement on trade and services which now, we call as the WTO. And India agreed to liberalise its financial sector and allow the foreign capital to enter into the Indian financial sector. And from then onwards slowly and steadily we are seeing a situation where the government is forcing the public sector to vacate the space in order to make the private sector and foreign capital to occupy that space.
The financial institutions, the banks and insurance, they mobilise the savings of the general public, and for any economy to grow, the domestic savings plays the most important role; and if we look at the domestic savings in India, the household component of those savings are the largest, and we want the Government of India to control those savings, the domestic savings because they are important for investment in areas which benefit the entire Indian community. And we are totally convinced that if you allow the foreign capital and the Indian private sector to gain access and control over those domestic savings in the long run, it will be disastrous for the Indian economy. And that precisely is the reason we have been opposing the privatisation of the insurance industry and the entire financial sector including the banks.
The banks by mobilising the savings of the people, the insurance by mobilising the savings of the people, enormously contributed to the national economy. And that precisely is the reason that the Indian ruling classes thought by nationalising the State Bank of India in 1955 and nationalising the life insurance business in 1956, they may gain control over the savings of the people which could be utilised to develop the infrastructure and industrial rise in the Indian economy. Now we are confronted with a situation where there is a huge concentration of wealth in the hands of a few capitalists of India, unimaginable concentration, and we are ashamed to know that India is one of the most unequal societies in the world, and with the huge concentration of wealth, these people feel what they could not do in the past, they are in a position to invest in the infrastructure, and they want the public sector banks and the public sector insurance industry to be in their control. The government is hell bent upon in destroying these institutions which have created a self-reliant India.
The second aspect that we must see, perhaps in the last 2 decades, Indian economy has gone through a process of financialisation, where finance is become independent to production, finance has become speculative, and it is not necessary for the finance to play a secondary and supportive role for industries. Even without establishing the industries, the finance can earn the profit through speculation and that is what we are witnessing today. When the real economy is suffering, the Indian stock market is registering enormous growth and that is the result of the financialisation of the Indian economy. This is the situation we are confronted with.
The Life Insurance Corporation is one Institution which is unique, a institution the like of which you will not find anywhere in the world, because after the initial deployment of 5 crores in LIC, the government did not infuse any additional capital. Even the additional capital of 95 crores that came to us in 2011, to meet the regulatory needs/requirements was a book adjustment generated internally and this is one institution where the owner did not infuse additional capital for expansion. If LIC has expanded today, it has good subsidiary, a number of subsidiaries, foreign entities, it is only on the basis of policyholder’s funds. So much so, you will be surprised that even the solvency margin which is required by a owner to meet by putting additional capital, that solvency margin also is met by the policyholders’ fund. So, we are asking a question – when LIC today is a Trust, it is a mutual benefit society, what right the GOI has the got to privatise this industry?
The government says that LIC IPO will be 5%, 10%, they are still not able to assess the value of LIC. More than 50 products have to be valued, 4 or 5 subsidiaries have to be valued, foreign entities have to be valued, the huge real estate of LIC has to be valued, and today they say it may not be possible to value the LIC in the next at least one month. So that is the situation and a government which invested 5 crore rupees, today it is estimated finally the value of LIC is determined anywhere between 10 lakh to 15 lakh crore rupees.
On a 5 crore rupee, this is the value that we have created for LIC and it is the public trust, it is the public money that has gone to make LIC. Essentially whether it is the bank or insurance, in reality it is public because the banks or the insurance companies are only the intermediaries. It is the public money that we deal with it and essentially, they are public. And therefore, we have decided to continue our struggle, because we feel that the IPO is the first step towards privatisation and in the General Insurance industry, it has given confidence to the businesses. Before the nationalisation of the General Insurance industry, there were only 2 types of businesses. One was the corporate business, the second was the motor vehicle business. It was only after the nationalisation of General Insurance industry, that the personal lines of General Insurance businesses came in to force: shopkeeper’s business, medical insurance, crop insurance, cattle insurance all these insurances came about and today in General Insurance industry 25 % of the business comes from the rural areas.
And once the entire operation of a public sector unit is to generate profits to the shareholder rather than the servicing of the community, its business model changes. Rural areas would be neglected, small policy holders would be neglected and this is the real danger. And here is a big challenge to our movement.
I hope and I wish the farmer’s struggle, the struggle developed by the coming together of more than 300 farmer’s organisations – such kind of struggle can develop in the financial sector too if the bank unions, insurance and the all the others come together and we decide one common programme to launch a struggle to defend the public sector financial institutions.
Secondly, the challenge is also to relate our struggles to the common people. Most of the citizens of Indian today, approximately 65% of the population are born and brought up after the 1991. They have not seen the havoc the private sector had played before the nationalisation and all of them are the product of post liberalisation period and they feel that everything private is good and everything public is bad. And this perception, the popular perception which is there has to be changed so that campaign is essential. Thirdly we must relate our campaign/struggle to the common people. We must tell what is the role the public sector plays. In a country like India, public sector is necessary to implement the constitutional obligations of a government.
Articles 38 to 43 of the Constitution, the Directive Principles, make it absolutely clear what the role of the public sector is. And it is the responsibility of the government to ensure that the concentration of wealth does not take place, the resources of the entire community must be utilised for the benefit of the community. Then we also have the policy, the affirmative action, the government must take to uplift the deprived, the depressed, the vulnerable sections of our population, and if the public sector is privatised, all these constitutional obligations will go into the background.
The Constitution is an arrangement, agreement that the people of India came through and through this we decided how our country should be built, how the society should be constructed. And we through our struggle, we must resist the government policies, and the government policies not just on the financial sector.
If you look at the government public enterprises policy, they have categorised the public sector into strategic and non-strategic. And they are saying that all non-strategic public sector enterprises are going to be sold outright. And the strategic industry of which the banking, insurance and financial sector is there the government is going to maintain a minimum presence which means that the government wants to vacate the entire economic space in this country and that would be disastrous and it is on that basis that our movement must be built.
I am happy that today the opportunity is available to us to share our views and experiences and I do hope that very soon all of us come together and build a movement, a stronger movement, a powerful movement in the financial sector to defend the national economy and defend the interests of vulnerable sections of the people, and build a society which is just, fair and equal for everybody.