Two PSU banks, one insurance firm to be privatised, LIC IPO this year

The government on Monday announced that two public sector banks and one general insurance company will be privatised and LIC will be listed on the bourses in the financial year 2021-22 as part of the consolidation in the banking and insurance sectors. It has also announced Rs 20,000 crore recapitalisation of PSU banks.

What privatisation of PSU banks means?

The government will start the process of privatisation for two public sector banks in the coming financial year, Finance Minister Finance Minister said in her budget speech. However, the Minister did not disclose the names of the banks. The government currently holds majority stake in PSU banks. The government is expected to bring down the stake in the two PSU banks below 51 per cent or sell the entire stake to private ownership. Bank unions are likely to oppose the government’s initiative to privatise PSU banks.

Which bank will qualify for privatisation?

Banking sources say that smaller and middle level banks are likely to be privatised by the government. It’s unlikely to change the structure of big banks like State Bank of India and PNB. “The privatisation of two public sector banks and the stake sale of LIC should help the government meet the disinvestment target and reduce the fiscal constraints,” said Raghvendra Nath, Managing Director, Ladderup Wealth Management.

Is IDBI Bank on the privatisation list?

IDBI Bank is unlikely to be in the list of the government. Life Insurance Corporation (LIC) currently holds majority stake in IDBI Bank. LIC is supposed to reduce the stake in IDBI over a period of time. LIC is unlikely to give up control over IDBI Bank in the near future.

Which general insurance company will be privatised?

The government has not disclosed the name of the public sector insurance firm that will be on the privatisation block. There are four PSU general insurance companies: New India Assurance, United India Insurance (UII), National Insurance Company (NIC) and Oriental Insurance Company (OIC). The government had earlier dropped its plan to merge UII, NIC and OIC and decided to recapitalise them. Besides, the government also owns reinsurer General Insurance Corporation (GIC Re).

What does LIC IPO mean for the government?

Finance Minister Nirmala Sitamaraman has said Life Insurance Corporation (LIC) will go for an initial public offering in 2021-22. This is likely to be a mega IPO going by the Rs 32 lakh crore assets under management of LIC. The government is expected to mop up a sizeable amount from the LIC IPO, making the life insurer one of the largest firms in market capitalisation. LIC has already started the spadework for the IPO.

What is Stardust 1.0, the first rocket to run on biofuel?

On January 31, Stardust 1.0 was launched from Loring Commerce Centre in Maine, US, a former military base, becoming the first commercial space launch powered by biofuel, which is non-toxic for the environment as opposed to traditionally used rocket fuels.

Sunday’s launch marks another historic first for Maine since Stardust 1.0 has become the first commercial rocket launch for the state located in northeastern US.

So, what is Stardust 1.0?

Stardust 1.0 is a launch vehicle suited for student and budget payloads. The rocket is 20 feet tall and has a mass of roughly 250 kg. The rocket can carry a maximum payload mass of 8 kg and during its first launch carried three payloads. According to a report in Politico, the payloads included a cubesat prototype built by highschool students, a metal alloy designed to lessen vibrations, which is developed by Kellogg’s Research Labs and a cubesat from software company Rocket Insights.

The rocket is manufactured by bluShift, an aerospace company based in Maine that is developing rockets that are powered by bio-derived fuels. Stardust 1.0 is being developed by the company since 2014 when the company was founded by its CEO Sascha Deri.

These rockets will help to launch small satellites called cubesats into space in a way that is relatively cheaper than using traditional rocket fuel and is less toxic for the environment. Other rockets being developed by the company include Stardust Gen. 2, Starless Rouge and Red Dwarf, which is a low-Earth orbit (LEO) vehicle and is designed to fly a maximum payload of 30 kg.

There are other companies working towards making access to space easier. One of them is Amazon founder Jeff Bezos’s space company called Blue Origin. Last year in October, the company tested a rocket system called New Shephard. The rocket system is meant to take tourists to space eventually and offers flights to space over 100 km above Earth and accommodation for payloads. Such efforts are a part of a growing number of commercial space companies that are working to provide easier and cheaper access to space to laypeople and also to make access to space cost-effective for purposes of academic research, corporate technology development and entrepreneurial ventures among others.

Significantly, the accommodation of mini payloads provides easier access to space to not only experienced researchers but also to students who are part of educational institutions and are working to develop their own space programs “for less than the price of new football uniforms” as Blue Origin has put it.

Another company founded by British entrepreneur Richard Branson called Virgin Galactic signed a Space Act Agreement with NASA’s Johnson Space Center in June 2020 to encourage commercial participation in orbital human spaceflight to the International Space Station (ISS) and help in the development of a Low Earth Orbit economy.

What is biofuel?

What the biofuel used for Sunday’s launch is made up of is not yet clear, but as per media reports it can be sourced from farms around the world. Deri told Politico that the biofuel is a blend of substances that can be had from any farm across the US and that it is nontoxic. “My two young daughters could eat the fuel and no harm would come to them with the exception of constipation maybe,” the report quoted Deri as saying.

But broadly, biofuels are obtained from biomass, which can be converted directly into liquid fuels that can be used as transportation fuels. According to the US government’s office of Energy Efficiency and Renewable Energy, the two most common kinds of biofuels in use today are ethanol and biodiesel and they both represent the first generation of biofuel technology. Ethanol, for instance, is renewable and made from different kinds of plant materials. Biodiesel on the other hand is produced by combining alcohol with new and used vegetable oils, animal fats or recycled cooking grease.