Politics beats economics in insurance bill row

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The logjam over the insurance reform bill continued on Thursday as an unrelenting opposition led by Congress forced the Modi government to go on the back foot. All pointers suggest it may be referred to a select committee of the Rajya Sabha as demanded by opposition.

Though the government is still hopeful of getting the bill passed in the upper house this session, the chances are getting dimmer day by day with just a week left for the session.

So far, politics seems to have had the better of economics as opposition parties, determined to cash in on their majority in the house, voiced concern that the bill if passed in the current form may open up the floodgates to FII investment because of the composite cap of 49 per cent FDI proposed by the government. The Congress is not opposed to raising the FDI cap to 49 per cent, a proposal initiated by them.

"Today when that same bill is being placed, they say we are worried about this and that. Why did not these worries affect them earlier? Therefore, I have reasons to suspect that it is stonewalling just for the sake of stonewalling," commerce and industry minister Nirmala Sitharaman was quoted as saying by PTI.

"We are very keen to have this Bill passed (this session). Let's see," she said, when asked if the bill would be passed in the current session of parliament.

Some opposition members felt the government is reconciled to the bill not getting passed this session and it appears that government will not push hard, fearing it may precipitate matters.

Prime minister Narendra Modi wants to showcase the passage of the bill to send signals to foreign investors when he visits the United States in the third week of September. Government saw the opposition stonewalling as an attempt to deny credit to Modi for the passage of the legislation before his US visit.

With the cabinet clearance to hike FDI cap in defence to 49 per cent and allowing 100 per cent FDI in rail infra on Wednesday, some delay in insurance reform will not be seen as much of a setback, analysts said.

The approval to hike the FDI limit from the current 26 per cent, a proposal which has been pending since 2008 in the Rajya Sabha, is expected to attract long-term capital, besides improving the overall investment climate.

An all-party meeting on August 3 failed to break the impasse on the insurance bill and not much headway has been since then as oppositions parties stuck to their position. BJP’s efforts to woo AIADMK support have not worked so far, though BJD may go with the ruling NDA and NCP if the bill comes in the same form as proposed by UPA.

Nine parties — Congress, CPI-M, CPI, SP, BSP, DMK, JD (U), Trinamool Congress and RJD — oppose the bill. These parties have also given notice to Rajya Sabha chairman Hamid Ansari to refer the bill to a select committee.

In the event of the bill being referred to a select committee, there could always be a special session of the Rajya Sabha ahead of the winter session to get it passed if the select committee so recommends in the next few weeks.

Finance minister Arun Jaitley, who is also leader of the upper house, had said the government is open to minor modifications in the Insurance Bill.

But the BJP had opposed the insurance bill when UPA government brought it in parliament a couple of years ago. If BJP played politics then, it is Congress which is playing politics now, analysts said.

The government has so far rejected the opposition demand for referring to the select committee but finance minister Arun Jaitley and parliamentary affairs Venkaiah Naidu have been talking to all the parties. Jaitley is understood to have had a meeting with some of the opposition leaders on Thursday as well. But the stand-off remains.

A government official said anything is possible at this stage. But the chances of the bill being taken up this session is becoming increasingly remote.

While ruling NDA has 57 members, UPA including six of NCP has 90 members in 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 Bodoland People’0s Front one.

Meanwhile, insurance giant Metlife said on Thursday “We are watching with interest as the bill passes through the process. We will work out our position when there is clarity. Metlife sees India as an attractive market,” Metlife’s Asia president Chiristopher Townsend told reporters.

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