Business Standard

Govt postpones decision on Ins Bill under political pressure

Press Trust of India  |  New Delhi 

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Differences among ministers and reservations expressed by members of UPA allies over sector reforms during the Cabinet meeting prompted the government to postpone the decision on the Insurance Laws (Amendment) Bill, 2008, sources said.

"What is the urgency...The consideration of the item has been postponed because 26 per cent foreign investment is already permitted," Finance Minister told reporters after the Cabinet meeting.

Later, a senior Cabinet Minister, who was present in the meeting, said, "There was opposition from many ministers, including those belonging to allies."

The Bill, which was tabled in Rajya Sabha in 2008, proposed to increase the FDI limit in the insurance sector to 49 per cent, but Parliamentary Standing Committee on Finance wanted it to be retained at the current level of 26 per cent.

The Cabinet was expected to decide on retaining the FDI ceiling in insurance at 26 per cent in light of the recommendations of the Standing Committee.

The panel, which was headed by former Finance Minister and senior leader Yashwant Sinha, had rejected the government's proposal to raise FDI ceiling to 49 per cent in December last year saying the it was made "without any sound and objective analysis of the status of the insurance sector following liberalisation".

Foreign insurers and their domestic partners, however, have been demanding an increase in the FDI cap to 49 per cent to fund their business expansions.

  

Govt postpones decision on Ins Bill under political pressure

Bowing to pressure from Trinamool Congress and other allies, the government today postponed a decision on retaining the Foreign Direct Investment (FDI) limit in the insurance sector at 26 per cent as suggested by a Parliamentary committee.

Differences among ministers and reservations expressed by members of UPA allies over sector reforms during the Cabinet meeting prompted the government to postpone the decision on the Insurance Laws (Amendment) Bill, 2008, sources said.

"What is the urgency...The consideration of the item has been postponed because 26 per cent foreign investment is already permitted," Finance Minister told reporters after the Cabinet meeting.

Later, a senior Cabinet Minister, who was present in the meeting, said, "There was opposition from many ministers, including those belonging to allies."

The Bill, which was tabled in Rajya Sabha in 2008, proposed to increase the FDI limit in the insurance sector to 49 per cent, but Parliamentary Standing Committee on Finance wanted it to be retained at the current level of 26 per cent.

The Cabinet was expected to decide on retaining the FDI ceiling in insurance at 26 per cent in light of the recommendations of the Standing Committee.

The panel, which was headed by former Finance Minister and senior leader Yashwant Sinha, had rejected the government's proposal to raise FDI ceiling to 49 per cent in December last year saying the it was made "without any sound and objective analysis of the status of the insurance sector following liberalisation".

Foreign insurers and their domestic partners, however, have been demanding an increase in the FDI cap to 49 per cent to fund their business expansions.

  
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