INDIA – New UPA thrust on insurance

Unfazed by continuing opposition to recent reform initiatives such as allowing foreign direct investment (FDI) in retail and a diesel price hike to contain the fiscal deficit, the UPA government is preparing another round of big-ticket reforms. On the cards is a big push for infrastructure through a special fund and a fresh thrust to help foreign investors in insurance.

 

Prime Minister Manmohan Singh’s government is willing to walk the talk to cover lost ground through a rush of measures, which include a politically contentious move to raise the FDI stake ceiling in insurance companies to 49 percent from the current 26 percent.

 

The Insurance (Amendment) Bill that proposes to raise the FDI limit to 49 percent has been pending in the Parliament after it was introduced in the Rajya Sabha (Upper House) in 2008 for lack of political consensus.

 

The sources said that government is keen on introducing an amended Bill in the winter session of Parliament to raise the FDI limit, demonstrating its intent about pushing ahead with measures, even if these are fraught with political risks.

 

The probability of Parliament voting the Bill into law, however, remains uncertain given the strong opposition from both former ally Trinamul Congress and the Left parties.