LIC investors are being robbed by government

The government is about to sell IDBI Bank to LIC. Many analysts have compared this to ONGC buying out HPCL, and handing over money to the government. In that sense, money moves from one pocket of the government to another. This is not true in case of LIC buying out HPCL.
In case of ONGC buying HPCL, ONGC used the cash it had on its books and also borrowed money. ONGC is a company owned by the government. So is HPCL. Hence, money moved from one pocket of the government to another.
Same is not true about LIC buying out IDBI Bank. All the money that LIC has, is the money that investors/savers have handed it over, over the years. This is not government money. It is the money that the average LIC policy holder has handed over to LIC, because it trusts LIC to do a good job. The faith of LIC policy holder in LIC is being abused.

Further, IDBI Bank is the worst performing bank among all public sector banks. It has a bad loans ratio of 27%. Basically, the govt is unloading its stake in a bank which should not in the business of banking, to LIC policy holders.
LIC will pay a huge amount to the govt to buy a certain stake in IDBI Bank. This is not where it will end. IDBI Bank will need capital to continue functioning in the years to come. LIC, as a major owner of the bank, will have to continue providing this capital.

Hence, the govt is killing two birds with one stone. First, its gets some money out of a bankrupt IDBI Bank. Second, if it had continued to own IDBI Bank, it would have had to continue providing capital to the bank, in the future. That obligation now comes down.
There is no free lunch in economics. The individuals, who buy LIC policies, will basically bear the cost of this bad investment. LIC is been looted by government. The losses of government are being transferred to LIC policy holders. These policy holders will get fewer or no bonuses because LIC's profits will reduce.