MUMBAI: Insurance behemoth Life Insurance Corporation (LIC) of India earned a total investment income of Rs 1,80,117 crore during the financial year 2016-17.

For LIC, which is also the largest domestic institutional investor in the country, the income was earned through investment ingovernment bonds and state developmentloans, interest, corporate bond interest,dividend income and profits on sale of equity.

The market value of LIC's total investment grew 17.08 per cent at the end of FY17 at Rs 24,69,589 crore (provisional) from Rs 21,09,253 crore a year ago.

During the year (2016-17), LIC invested Rs 2.6 trillion in Central and State government securities with an average annualised yield of 7.65 per cent during the year," sources said.

While an investment of Rs 41,751 crore was made by LIC in equities, it realised a profit of Rs 19,302 crore by sale of equity during the past year. An investment of Rs 27,350 crore was made in corporate bonds.

The government has announced its borrowing programme of Rs 5.8 trillion and it is estimated that state governments together will borrow another Rs 4 trillion during the current fiscal.

LIC believes, going ahead, the interest rates may not fall but go up.

With RBI marking a shift in the monetary stance to neutral, and US Fed hinting at more hikes in the interest rate during the year, the chances of a repo rate cut in the country are less," the source said.

Moreover, bond yields are expected to be range bound during the year.

The longer end of bonds, the yields are expected to harden during the second half of the year.

However, LIC believes that the capital market is expected to do well during the year on the back of government reforms, impending resolution to bank NPA problem and also the strong inflows into mutual funds and insurance companies due to lower fixed deposit rates.

Investing large pools of funds into the markets judiciously, optimising returns to the policyholders as well as ensuring safety of the investments in a volatile debt and equity market have been a challenging task that the corporation has been performing consistently, LIC sources said.