Merge state oil firms to absorb price shocks

Rising prices of oil due to the global price rise of crude oil have necessitated the need for some measures so that the burden of the price rise of crude oil may not       result in a price rise of oil and gas, that too without affecting the national economy. This can be done by measures taken for a drastic cut in overheads of oil companies in India.

Merger of public-sector oil companies necessary

Presently, there are many public-sector companies in the country engaged in exploration, refining and marketing/distribution of oil and natural gas, namely Oil and Natural Gas Corporation Limited (ONGC), Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), Hindustan Petroleum Corporation Limited (HPCL), Gas Authority of India Limited (GAIL), Oil India Limited (OIL), apart from some other companies like Chennai Petroleum Corporation Limited (CPCL), Numaligarh Refinery Limited (NRL) and Petronet LNG Limited.

It is high time that all these companies may be merged together for a drastic cut in overheads and elimination of unhealthy competition. Merger can be initiated initially on the basis of (a) marketing and distribution (b) exploration and refining.

The policy of pricing petrol, diesel and LPG should be totally overhauled by putting all petroleum products under the GST network to ensure uniform pricing of these in all parts of the country. This should not pose any problem because the GST system has provision for levying cess over the highest GST slab. There may be weekly revision in prices rather than daily, with prices of petrol and diesel rounded to the nearest rupee, and that of LPG cylinders rounded in multiples of rupees 50. In practice, delivery persons never return the balance, which in the suggested manner will become a gain to the exchequer. Oil companies had once decided to replace old iron cylinders with transparent plastic cylinders to check usual incidents of pilferage. But these plastic cylinders are not commonly seen even after so many years of introduction. Iron cylinders should not be manufactured in future. However, new plastic gas cylinders should be in 5, 10 or 20 kg LPG packing, to be in the true spirit of metric packaging and for lasting long.

LPG subsidy may be gradually abolished, and should be provided only on submission of affidavits by family heads about total family income rather than voluntary surrender of LPG subsidy by those having annual family income of `10 lakhs. Prices once increased should not be reduced even after reduction in global crude prices. Such saving should be kept in reserve to avoid future increase in case of further global price rise of crude. Rise in prices of goods and transportation due to increase in fuel price is never reduced with any fall in fuel price.

Merge four public-sector companies engaged in General Insurance on the lines of LIC of India

Likewise, it is high time that four public-sector insurance companies engaged in general insurance may be merged to reduce overheads and unnecessary competition amongst these public-sector companies. Such a merged single public-sector company engaged in general insurance can then ensure vacation of merged nearby branches of the suggested unified public-sector company. Such a step will be in the larger interest of the general public to save them from malpractices presently prevailing in private-sector insurance companies engaged in general insurance. I recall a case when a private-sector company unethically deducted ten per cent from the settled claim amount towards a fire accident because of late submission of a No Objection Certificate (NOC) from the bank. Rather, the private-sector company was at gain by utilising the claim amount for its business due to late lodging of the claim papers. Even the Insurance Regulatory and Development Authority (IRDA) did not take any step against the company on lodging the complaint against the said private-sector company. Every branch of all public-sector banks must collaborate with any unit/branch of any public-sector company engaged in general insurance for the benefit of their customers.

Public-sector banks should promote LIC of India rather than private insurance companies

Public-sector Life Insurance Corporation of India (LIC of India) was constituted on 01.09.1956 by merging 245 private insurance companies and has done fairly well in the last seven decades of its formation. But gradually, life insurance business is being captured by later constituted private insurance companies, many of which are promoted by private banks. These private banks and their promoted insurance companies always work in alliance to promote their insurance business in addition to banking business.

But unfortunately, several public-sector banks have started collaborating with private insurance companies rather than promoting public-sector LIC of India. It is neither in the interest of the public sector nor in the interest of people, where many private insurance companies offer gimmick schemes to befool people through their agents, paid heavy commission for bringing business by hiding facts of apparently good-looking insurance plans. The Banking Department of the Department of Financial Services (Government of India) should direct all public-sector banks to collaborate only with LIC of India for providing bank customers life insurance services through a wide range of LIC policies. Every branch of all public-sector banks should have collaboration with some nearby unit of LIC of India, which can provide incentives to concerned bank branches to motivate bringing more business to LIC of India.

Merge nearby units of LIC of India for drastic cut in unnecessary expenses

It is observed that even after seven decades of merger of 245 private companies engaged in life insurance, nearby units could not be merged together for a drastic cut in overheads of LIC of India. There are many such cases where a single building has more than one unit of LIC of India, like one such in Daryaganj (Delhi), which has two units of LIC of India. There are also more units of LIC of India in Daryaganj apart from the two in a single building. LIC of India should urgently draw a plan whereby nearby units of LIC of India may be merged into a single unit. On the contrary, there are areas like the big commercial hub in the Chandni Chowk area of Old Delhi where the only unit of LIC of India in the SBI Building is now closed.

 LIC of India should search for some suitable premises, preferably a government building, like one lying vacant since its completion near Bhai Mati Dass Chowk in Chandni Chowk, constructed during the redevelopment plan of Chandni Chowk. Healthy competition can be developed by giving appreciation points to branch managers bringing more insurance business in the public sector. This will promote the public sector, save people from gimmick and misleading insurance plans of private-sector companies, and provide a single-window facility for all banking and insurance needs. Profits of public-sector insurance companies will increase by saving on commission paid to agents, which can and should be reduced, especially when insurance agents pay back a heavy portion of their commission to their clients. Payback is as high as 2.5 per cent in the single-premium LIC pension plan Jeevan Akshay.

LIC of India should abolish useless formalities

LIC of India requires all annuitants having Jeevan Akshay policy to submit life certificates after getting these attested from a responsible officer, including a bank branch manager, gazetted officer, registered medical practitioner, postmaster, school or college principal, Class 1 officer of governments or their undertakings, LIC officer, LIC development officer, or LIC agent, after the annuitant has signed before the attesting authority. LIC of India should abolish this useless formality of a life certificate. Abolition of this formality will in no way harm LIC of India because Jeevan Akshay is simply a pension plan, and it does not make LIC of India pay for the death of the annuitant except returning the investment money to the nominee in case of death of the policyholder. However, such a life certificate may be required in cases where cheques or online remittances are bounced back.

Public-sector IDBI Bank be named as LIC Bank of India

Public-sector IDBI Bank, where LIC of India has acquired major shareholding, should be renamed LIC Bank of India, with facilities of a single-window system for all banking and insurance needs available at each branch.

Welcome reports about further merger of public-sector banks

News reports indicate that further mega merger of public-sector banks is on the cards. But till such a merger plan is implemented, bank charges and interest rates (separately for loans and deposits) should be the same for all public-sector banks. There should be uniformity in different types of forms, which should be simplified with provision to be filled on computer, like passport forms, with subsequent provision for such computer-filled forms to be emailed to banks to avoid errors and reduce man-hours.

The author is a writer, a Guinness World Record holder and an RTI consultant; views are personal