Rs 31 lakh crore on auto pilot as Life Insurance Corporation, UTI, State Bank of India stay headless

Prime Minister Manmohan Singh pulled up the Road Transport ministry on Wednesday for failing to appoint a full-time chairman at the National Highways Authority of India (NHAI) for over six months and reducing its annual targets for highway development in 2011-12. 

What the PM left unsaid was the two issues are linked - the lack of a leader at the nation's road building agency directly affects its ability to meet targets or set higher ones. 

If Dr Singh is worried about a leadership deficit denting UPA's infrastructure targets, he should be absolutely alarmed by the lack of leaders in India's largest financial institutions. 

Even a vibrant NHAI chairman can do little if lenders are not healthy enough to finance long-term projects. More than half-a-dozen financial institutions and banks are running with a near empty top deck as government departments toss files on critical appointments in the sector. 

These institutions, together, are the custodians of lakhs of crores of pub LIC money, and one wrong decision by them could have serious consequences for the economy. 

Over half of Indians buy their insurance cover from the sarkari Life Insurance Corporation (LIC) of India and park their savings in public sector banks like the State Bank of India - in the belief that these are sovereign entities that cannot fail. 

It seems the government has begun to share the belief that these entities can't fail - even if there's lingering suspense over who's in charge of them. Take the case of Life Insurance Corporation or LIC, the country's largest financial institution. With assets of over Rs12 lakh crore, LIC has been without a regular chairman since May 2 when T S Vijayan's term came to an end. 

The government then gave charge of the kitty, which actively moves markets with its daily trading operations, to R K Singh, an additional secretary in the finance ministry. Singh remained in the hot seat for 25 days until the government named Dinesh Kumar Mehrotra, one of LIC's managing directors, as the acting chairman for three months. 

"Unless someone is clearly in charge in such situations, decision making is completely paralysed," said management guru and author Gurcharan Das. "This is a perfect example of how government destroys wealth of a nation and why companies like LIC or Air India should be privatised," Das told ET, stressing that a government 'must govern, not run businesses.' 

In the first week of 2011-12, when most banks were drawing up their strategies for the new financial year, India's largest public sector lender, State Bank of India or SBI, was waiting for a new chairman to take charge of the institution that manages Rs9.33 lakh crore of public deposits.