49% FDI in insurance stuck between ifs & buts

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All-party meeting inconclusive but opposition may relent

49% FDI in insurance stuck between ifs & buts
The government's bid to further open up the insurance sector to foreign investment hit a fresh hurdle as eight opposition parties led by Congress asked for the bill to be sent to a select committee.

But chinks in the opposition were also visible, with Congress' close ally NCP led by Sharad Pawar and Naveen Patnaik's BJD announcing support for the bill in the Rajya Sabha, where the ruling NDA does not have a majority.

While the all-party meeting convened by parliamentary affairs minister Venkaiah Naidu failed to evolve a consensus, the NDA government kept its options open on the bill, expressing its readiness to make amendments if required. Finance minister Arun Jaitley also attended the meeting on Monday.

Though the Congress, while in government, had aggressively pushed for composite FDI cap at 49 per cent in insurance, it beat a retreat by joining the Left parties in seeking to refer the legislation to a select committee.

Referring the insurance reforms bill to the panel would lead to delay in opening up the sector that is starved for funds. Interestingly, Congress is obstructing the same legislation it had pushed for a while in government.

Justifying the party position, opposition leader in Rajya Sabha, Gulam Nabi Azad said, “We are totally in favour of FDI. It is our baby and it was the BJP that was opposed to the bill in 2008. We were given to understand that our bill is going to be passed in the House. But the NDA government has made some substantive amendments to the bill.”

“We have recommended that the substantive issues like FDI, which have been diluted by FIIs along with other issues should be discussed, examined dispassionately and objectively by the select committee. The bill can be passed in the winter session and we will ensure its passage,” Azad added.

The composite cap of 49 per cent FDI in insurance retained in the bill approved by cabinet committee on economic affairs (CCEA) last month, was what the Congress had proposed while in power.

The six-member NCP that is part of the UPA and the seven-member BJD have indicated they may extend support. NCP’s Praful Patel said if the bill came in the form UPA had formulated, NCP would have no hesitation in supporting it as his party was part of the UPA cabinet that cleared it.

While ruling NDA has 57 members, UPA, including the six of NCP, has 90 members in the 245-member Rajya Sabha. TMC has 12, AIADMK 11, SP 10, CPM nine, DMK four, CPI two, INLD two, NC two, SDF one, JD (S) one, TRS one and BPF one. Besides, there are 10 nominated members and nine independents. The AIDMK has not yet announced its stand on the bill.

Indications are that there may be another meeting of political parties in a couple of days to resolve the deadlock. Some opposition members in the upper house, however, were not optimistic of the issue being resolved. They maintained that the fear is that of opening the floodgates to portfolio investments and not raising the FDI cap to 49 per cent.

Parties that gave notice to Rajya Sabha chairman Hamid Ansari include Congress, CPI-M, CPI, SP, BSP, DMK, JD (U), Trinamool Congress and RJD.

The all-party meeting convened by the government remained inconclusive on Monday. “We have agreed to meet again in the next two days to arrive at a consensus on the possible formulation of the legislation,” a senior opposition party member who attended the meeting said.

The bill that was to be taken up on Monday has now been deferred. No fresh date has been announced.

Though the ruling party is making all-out efforts to get the bill passed in the current session that ends on August 14, the opposition appears to be determined to stall the same.

Meanwhile, finance minister Arun Jaitley said the bill was the same as the one introduced by his predecessor P Chidambaram. The former finance minister and senior Congress leader has said that UPA should not have any objection in supporting it. He also says he is willing to discuss and sort out the issue if there was only the question of wording or language of the bill.

Reaching out to Congress, Jaitley said the government is open to minor modifications to get the bill passed in the current session of Parliament.

“I hope the intentions are to move forward and if the intentions are to move forward there are only three possibilities,” Jaitley told TV channel Times Now.

The first of the three possibilities was that the Opposition should approve the bill in its present form. Second, “if UPA has changed its mind they can participate in defeating the bill in which case, one House will approve it and the other House will disapprove it,” he said. The third option was the UPA should suggest minor modifications. He added, “The fourth possibility is to do nothing but keep it hanging, for which I am afraid there is no rationale which I can understand.”

Last Thursday, Congress offered conditional support to Modi government’s plan to hike FDI limit to 49 per cent in the insurance sector but said the support will come only if the government does not deviate from the UPA proposal. The Modi government, after cabinet clearance to the insurance bill last month, had said the proposal is to allow a composite 49 per cent FDI through the FIPB route.

There is also a view that amendments suggested in FDI are meant to increase cash flow in the sector. The other important aspect of the bill is the health insurance business, which is in a growth phase in India.

Minister of state for parliamentary affairs Prakash Javadekar said, “This is the same bill which the Congress was introducing. We are in talks with all the major parties. We have to wait for two days.”

A senior BJP leader, who did not want to be named, said that the Congress was using the passage of insurance bill in Rajya Sabha to armtwist the Modi government to agree to Congress getting leader of opposition status in the Lok Sabha, even though it does not have requisite numbers.

But the opposition attacked the government on the grounds that it sought to allow foreign interests to control the savings of crores of people.

“It was the Vajpayee government which allowed 26 per cent in FDI. We had opposed it then and also later when the UPA wanted to extend it to 49 per cent. It is same BJP that opposed the United Front government from bringing insurance regulatory authority bill, which sought to open up insurance sector, allowing up to 26 per cent FDI in the sector. Subsequently the NDA government improved upon and got the Irda bill passed,” pointed out CPM leader Sitaram Yechuri.

The same BJP did not cooperate with UPA to get the bill to raise the cap to 49 per cent passed for the last two years, Yechuri pointed out. Senior BJP leader Yashwant Sinha, who headed parliamentary committee on finance, had opposed raising of the cap beyond 26 per cent in both insurance and pension.

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