House panel to scrutinise Insurance Bill

New DelhiThe controversial insurance reforms Bill that seeks to raise the foreign investment limit in private sector insurance companies to 49% will be scrutinised by the Parliamentary Standing Committee even as the government on Wednesday said it has an “open mind” on the issue.

“The Bill will now go to the Standing Committee on finance,” minister of state for parliamentary affairs P K Bansal told reporters.

The Insurance Laws (Amendment) Bill, which was introduced in the Rajya Sabha on December 22 amid stiff resistance from the CPI(M) and its new found allies AIADMK and TDP, seeks to raise the Foreign Direct Investment (FDI) cap in the private insurance companies from 26 per cent at present to 49%. It took over four years for the government to pursue the proposal of raising the FDI limit in private insurance firms.

The intention to raise cap was announced by the then finance minister P Chidambaram in 2004 budget, but the proposal was kept in abeyance because of opposition from the Left, which was then providing extended crucial outside support to the UPA government.

To a question on the strong protests both inside and outside the House on the insurance reforms Bill, Bansal said “government has an open mind” on it. On the protest that followed the introduction of the LIC (Amendment) Bill in the Lok Sabha, he said the Left parties ‘mistook’ the Bill with the insurance reforms Bill.

The LIC Bill, he added, was aimed at raising the capital of state-owned company to Rs 100 crore from Rs 5 crore to make it “more strong to implement welfare schemes like ‘Aam Admi Bima Yojna’”. In wake of opposition from the Left Parties, which was giving support to the UPA earlier, the government referred the matter to the Group of Ministers (GoM) headed by external affairs minister Pranab Mukherjee.

The reforms could only move ahead after the Left parties withdrew support to the government in July. Although the insurance reforms Bill evoked good response from the government, the trade unions went on a strike on Tuesday in protest.