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LIC, other govt-owned insurers may have to sell their stake in ITC

Monday, April 17, 2017
By A Business Reporter

The government will probably have to sell out its stake in tobacco companies very soon. A group of socially responsible citizens have come together challenging the governments contrarian policy on tobacco. While on one hand, the government is committed to tackling the problem of tobacco and the ill-effects caused by it, the government owned insurance companies, in complete disregard to the government’s policy, continue to invest in companies like ITC, destroying the spirit and intent of anti-tobacco campaigns of the government.

Sumitra Pednekar, wife of Maharashtra’s former Home and Labour Minister, Satish Pednekar, who died of oral cancer in 2011 has launched a campaign by filing a PIL in the Mumbai High Court to get the government sell the stake it holds in tobacco companies, more particularly ITC Ltd through the various insurance companies including LIC, GIC and SUUTI. She is supported by top officials of the Tata Trust and Tata Memorial Hospital as petitioners in this initiative.

In letter and spirit questions have been raised about the contrarian Government policy on Tobacco. While on one hand the Government is committed to tackling the problem of Tobacco, government owned Insurance companies and SUUTI on the other hand have invested in ITC and other companies making Tobacco products.

The group of eminent citizens, including Tata Trust officials and Tata Memorial Hospital’s surgeons has filed a public interest litigation (PIL) in the Bombay High Court, seeking directions to public sector insurance firms to sell their holding in tobacco companies to protect public health. The Specified Undertaking of the Unit Trust of India along with public sector insurance firms holds stakes worth more than Rs 1.07 lakh crore in ITC. A very pertinent point that comes to the fore due to this is the fact that though ITC has been trying to project itself as a diversified conglomerate with interest in hotels and FMCG as well, a bulk of its revenues are still driven by the tobacco business. Apart from ITC, reports also suggest that The New India Assurance Company also has a 1.7 per cent stake in Hyderabad-based cigarette maker VST Industries that is valued around Rs 81 crore. According to the submission made in the filing, despite the government’s continued commitment to reduce tobacco consumption and undertake initiatives to curb its harmful effects, the acts of five insurers by continuing their huge investments in tobacco companies was against the spirit and intent of the Framework Convention on Tobacco Control, 2003 (FCTC).

Insurance premium paid to protect lives is being invested in killer tobacco industry. The directions that the group of citizens is seeking through its PIL will definitely pave the way for a changed scenario as far as the tobacco industry is concerned.

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