Govt suffers setback as opposition baulks at insurance bill

Plans by the new government to open the insurance sector to more foreign investment suffered a setback on Thursday after the opposition blocked the legislation in the upper house.

The landmark bill to liberalise the insurance industry, which marks Prime Minister Narendra Modi's first stab at legislative reforms, will now go to a parliamentary committee, which will submit a report later this year.

The bill proposes to increase the limit on foreign investment in insurance ventures to 49 percent from the current 26 percent.

Modi took office in May vowing to restore economic momentum and end years of policy paralysis, but the Congress-led opposition which has a majority in the Rajya Sabha demanded that a parliamentary panel examine the bill, saying there was no hurry to approve the measure in the current session which ends on Thursday.

"The government wanted to hurriedly pass FDI in Insurance, I'm happy that its now gone to a select committee," said Trinamool Congress MP Derek O'Brien.

Modi's government expects that if the sector is opened further, insurers such as Canada's Sun Life Financial Inc, Prudential PLC Nippon Life Insurance Co,Italy's Generali and Dutch insurer Aegon NV will inject more funds into what is the world's 10th biggest life insurance market - even though currently fewer than 4 percent of Indians have insurance.

Modi hopes such a step would help improve investor confidence in the broader economy sapped by years of policy neglect and dithering.

The Bharatiya Janata Party-led government has a majority in the Lok Sabha after the election in May and should face few problems in getting the bill cleared in that chamber.

The two main parties - the BJP and the Congress - remain bitter opponents even after the electoral battle, seeking to deny the other any political advantage.

When in opposition, both parties have sought to whip up resistance to liberalising sectors of the economy such as insurance and defence, and to labour reforms. Such steps are considered vital to reviving growth that last year fell to 4.7 percent, the slowest pace in a decade.

While the move to change ownership rules in the insurance business has suffered a delay, the government succeeded in pushing through other legislation including greater oversight on appointments of judges.

It introduced 13 new bills in the current session, of which four have been passed. One bill was withdrawn, leaving in effect 68 bills pending, the PRS Legislative Research said in a note.

Among the bills introduced was a first step at labour reforms, including allowing women to work night shifts and easing rules for hiring apprentices. The bill will be taken up for debate in the next session.

The previous government's efforts to move any kind of business in parliament were blocked by disruptions.

Post new comment

E-mail ID will not be published
CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.

EDITORIAL OF THE DAY

  • If the first 17 editions of Saarc were tragedies, Kathmandu was a sham

    Rarely has a regional grouping such as the South Asian Association of Regional Cooperation (Saarc) promised so much and delivered so little.

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

Chander Mohan Sethi

CMD, Reckitt Benckiser India

COLUMNIST

Varun Dutt

By the power of wind, let there be light

In India, the development of wind power began in the ...

Zehra Naqvi

Being unrealistic can be good for you

Depression is a term that most people use very casually ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture