India's largest and first life insurance firm is all set for disinvestment in the coming month. The intent was articulated by the finance minister in the previous year's Budget itself, and now minutes are being laid out regarding the listing of five per cent of overall shares for initial public offering (IPO). LIC IPO can be seen as a landmark in the government's disinvestment drive. It could be multiple times bigger than the AIR India disinvestment which earned the government around Rs 18,000 crore. Currently, the number of policyholders of the Life Insurance Corporation exceeds 29 crores, which is undoubtedly a huge number. Of its hopping 632 crore shares, around 32 crores could be listed for IPO, of which certain reservations are also made — including those for anchor investors. The disinvestment of LIC is projected to earn the government above Rs 50,000 crore. It must be stated though that such projections are thus far only a conjecture. How things pan out on the ground will be made clear only after the proper valuation of the shares. Still, given the embedded cost of 5.4 lakh crore in September last year — which marked a steep spike over the preceding months — it can be said with certainty that LIC IPO will account for a major chunk of Rs 65,000 disinvestment target set for the ongoing fiscal. Government can leverage this bountiful source of revenue to fix its fiscal deficit problem. Though the fiscal deficit for FY 2022-23 is estimated at 6.4 per cent — 0.5 per cent lower than in FY 2021-22 — it is still a concerning figure. Additionally, the government has announced for big capital expenditure push over the ongoing fiscal. The revenue from LIC IPO will certainly loosen the tightly tied hands of the government. On the part of LIC, the IPO will undoubtedly bring greater transparency and accountability in the functioning of the firm. Since after the IPO, LIC will be answerable to the investors, it will have to display its accounts on a routine basis. Although only five per cent of LIC is to be listed for IPO, a corporate culture — often associated with efficiency — will set in for LIC as well. This, however, cannot be equated with profitability — which is dependent on other factors that remain in the realm of speculation as for now. Furthermore, in reaping these benefits, the government and the firm are likely to face certain roadblocks. The greatest challenge at the present moment is attracting the investors. The first thing that needs to be seen is how the insurance firm competes with other leading private firms like Reliance India Limited and TCS in terms of attracting investors. Though the market capital of LIC is comparable to that of other leading private firms, its profitability is relatively lower. Also, the presence of huge government stakes may in itself prove to be a disincentive to the investors. Add to this the rise of interest rates by the US federal bank which has led to the shrinking of equity markets. This makes the chances of attracting foreign investments even more thin. Above all these things, a basic question remains as to what should be the motive of disinvestment. Should garnering revenue be the only motive behind disinvestment? There is no doubt that IPO of LIC is a desired significant step forward but the design, motive and timing behind it appear largely to be coherent only with immediate gains. The most important consideration here should have been around ensuring operational efficiency of the firm. As far as the LIC IPO is concerned, the government will certainly make immediate gains but how far will it help the firm in acquiring greater efficiency is a thing better left to time. It is expected that the current roadblocks and challenges will be tided over and the IPO will turn out to be profitable for all.