MP Corners Govt On Investments In ITC
Member of Parliament, Chandrakant Khaire today in the monsoon session of the Parliament in the upper house- Lok Sabha has raised the issue of duality in the policy adopted by the government in relation to tobacco and tobacco related products.
Raising the issue, the Lok Sabha MP questioned the government’s investment in tobacco companies. Khaire asked the Finance Minister, whether LIC had made any investment in a big tobacco manufacturing company and if so, sought details and reasons thereof. He also sought clarity on whether the state owned LIC was aware of the cautionary message on tobacco products and the health hazards being faced by the people due to its consumption and if so, the details thereof. Khaire further went on to seek details of any compulsion that would have been behind making such investment in a cigarette company by LIC.
These questions are a direct result of the recently filed PIL in the High Court of Mumbai by public spirited persons spearheaded by Sumitra Hooda Pednekar (wife of Maharashtra’s former home and labour minister, Satish Pednekar, who died of oral cancer in 2011), Ashish Deshmukh, Member of Legislative Assembly, Maharashtra including R Venkataramanan, managing trustee of Tata Trusts (In his individual capacity), Dr. Pankaj Chaturvedi , Professor & Surgeon, Tata Memorial Hospital and few others recognising and fearing the menace of tobacco and its effect on people.
The Minister of State in the Ministry of Finance in reply to the questions raised said with reference to (a) to (c): Life Insurance Corporation of India (LIC) holds equity shares of ITC Ltd which has a diversified presence in various businesses. The Corporation’s investments are carried out within the norms, rules and regulations issued by the Insurance Regulatory and Development Authority of India (IRDAI) from time to time in order to maximise return to the policyholders and minimise risk keeping within the limits prescribed by IRDAI.
The investments are done through the secondary market considering the performance and prospects of the individual company and the sector as a whole, with the objective of earning good returns for its policyholders. Government is aware of the health hazards attributable to tobacco usage. The Cigarettes and Other Tobacco Products (Packaging and Labelling) Amendment Rules, 2014, and further notification dated 24th September, 2015 mandates specified health warnings covering 85% of the principal display area of the packages of tobacco products. Tobacco consumption is a major risk factor for some of the Non Communicable Diseases (NCDs) such as cancers, cardiovascular diseases, chronic respiratory diseases etc.
Perplexed by the substantial investments made in the tobacco industry by wholly- owned public sector undertakings (such as LIC, GIC, Oriental Insurance Company, New India Assurance Co & National Insurance Company) and worried about the act of the wholly owned public sector undertakings investing in tobacco companies in contradiction to the anti-tobacco stance taken by the Government of India on a national as well as an international level, the Mumbai High Court heard a PIL. The petition made IRDA (The insurance regulator) and Union of India (through Ministry of Health and Family Welfare) a respondent to the PIL.
The Mumbai High Court had subsequently asked for more related parties including Ministry of Finance, Ministry of Trade & Commerce, ITC and SEBI to be joined in as respondents.
However, the Insurance Companies, along with SUUTI (Specified Undertaking of Unit Trust of India) as on date holds a 32% stake in ITC Ltd which is primarily a tobacco company. The Rs 383 crore shares that are held by Respondents no. 1 to 5 of the petition and SUUTI account for a majority of stake in ITC and translates into a humongous amount. Considering the price at which the stock is currently trading at Rs. 280 per share, the total value of the stake held by these insurance companies and SUUTI in ITC comes to a staggering Rs 1, 07,000 crore, out of which a sum of Rs. 76,505 crore is the amount invested by the public sector insurance companies.
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