60 years is a long time.

The then Finance Minister of India, TT Krishnamachari had to resign in 1958 when Haridas Mundra, a businessman from Calcutta sold fictitious shares worth Rs 12.5 million to the Life Insurance Corporation of India. Mundra was sentenced to 22 years in prison. Cheating LIC was considered a terrible crime because ordinary people paid hard earned money to insure their lives so that their families would not starve if they died so it was considered the same as robbing from widows and children. It is another matter that Mr Nehru appointed Krishnamachari Finance Minister again from 1964-65. After all Congress fellows have always been above the law. In today's TOI we learn that LIC bought 95% of shares of ONGC auctioned by the government last Thursday at Rs 303.67/ share amounting to Rs 121.468 billion. The base price set by the government was Rs 290/ share so LIC paid a premium of Rs 13.67/share. Why? LIC and ONGC are both public sector companies so why did the government force it to buy shares at a premium, especially when there was no demand for the sale? Shares of ONGC were selling at Rs 281/share on Saturday which meant the value of LIC's purchase was down to Rs 112.34 billion, a loss of Rs 9 billion in a matter of 2 days. We also learn that the government is going to relax rules for LIC in buying shares of public sector banks. Rules set by Insurance Regulatory and Development Authority do not allow LIC to buy more than 10% stake in any company but now it is being encouraged to do so. Public sector banks need more capital, probably because they have been forced to buy bonds that the government has been selling to finance its increasing deficit. Excessive spending by the government led to very high inflation forcing the RBI to raise interest rates which depressed the property market. Builders are sitting on large stocks but cannot reduce prices because they bought land at very high prices when the bubble was forming. If property prices fall a lot of builders will default on their loans which will leave banks with enormous bad loans on their books. Already SBI, which is seen as the most secure bank, has seen its credit rating reduced by Moody's from C- to D+. Last month LIC spent Rs 15.74 billion to buy shares of Punjab National Bank. Since LIC already owned 8.54% of the bank its stake has now gone over 10% as mandated by the regulator. LIC also owns 6% of Dena Bank but the bank is hoping to sell another 5% of its shares to LIC which will take the total to 11%. There are 47 ministries with over 80 ministers and they need to take their families to cooler resorts of Europe and America during the summer holidays so the government desperately needs money. So, use the money people have invested in the LIC for hard times to generate fictitious revenue. Rob the poor to pay the rich. Marvelous.