LIC and Investment in Tobacco Companies

Happened to read this news item in yesterday's Times. One of the NGO's had filed an RTI query which revealed that LIC has invested some 3.5k crores in Tobacco companies. NGO is questioning is it right thing to do when government is spending 10,000 crores on treatment of tobacco related illnesses.

On the first look, the question looks very good and I got into answering it negative. But is it really bad? Is it unethical? Is it something morally incorrect? Is it wrong from business perspective? Here are my thoughts..

  1. LIC is out there to make money. The consumers would want LIC to succeed so that they get their payouts, so that LIC keeps on giving them the insurance cover.
  2. Actually the NGO should be pushing to ban the tobacco industry completely, instead of asking government owned companies not to invest in tobacco related companies.  
  3. Now-a-days, investment patterns are so complex, it would be very difficult to predict, if my invested money is actually invested in Tobacco industry or not. What would be the stand if LIC has investment in PSU banks, which in turn have given loans to tobacco industries? Should LIC also keep itself away from such banks?  
  4. And on the logical side, a company that insures the lives of crores, is earning money from the investment which is ruining lives of crores... Isn't it ironical?
Any thoughts?


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