The passage of the contentious insurance amendment Bill in Parliament looks unstoppable now with differences being ironed out at the select committee of the Rajya Sabha.
The report was adopted with the Opposition Congress on board and only four of the 15 members of the committee dissented. The Congress, which was initially opposed to the inclusion of foreign institutional investors, on Monday appeared satisfied with the composite cap of 49 per cent for foreign equity.
The report is now slated to be tabled in the Upper House on December 10 by Chairman Chandan Mitra, two days before its extended deadline. The parliamentary logjam also having been resolved this morning, the Modi government’s intention to get its reform agenda rolling with a nod to the insurance Bill in this winter session looks within reach.
As reported in Business Standard on Sunday, the decks had been cleared for the smooth passage of the Bill after the Congress did an about turn on accepting the government’s move to invite all types of institutional and portfolio investment as part of foreign investment in the insurance sector.
The report, which was accepted without much opposition, only inserted the phrase “all types of institutional investments” within the clause on inclusion of foreign institutional investors.
The issue of Indian ownership and control as recommended by the select committee has been defined in the Bill with “control” including the “right to appoint the majority of directors or to control the management or policy decisions, including by virtue of their shareholding or management rights or shareholder agreements or voting agreements.”
As reported earlier in Business Standard, the select committee has accepted the unanimous view of all members to enhance the minimum capital for health insurance companies from Rs 50 crore to Rs 100 crore. The political parties that are opposed to the Bill per se — the Trinamool Congress, Left parties, Janata Dal (United) and Samajwadi Party — will present dissenting notes.
The Left has consistently contested the government stand that injection of foreign investment will increase penetration of insurance in the country. It will maintain that stance in its dissent. Incidentally, while opposing the increase of the FDI ceiling, the Left parties were backing a “composite cap”, so that the 49 per cent threshold was not breached.
If there is no further derailment of parliamentary business, the Insurance Amendment Bill could become a statute before US President Barack Obama arrives in India in January.
Finance Minister Arun Jaitley expressed satisfaction over the recommendations made by the select committee.
At a meeting with Jerry Gimstone, Chairman of Standard Life, the UK, and Uday Kotak, executive vice-chairman and managing director of Kotak Mahindra Bank, Jaitley said he was hopeful that the insurance market would expand once the Bill was passed by Parliament. Gimstone and Kotak are co-chairs of the India-UK Financial Partnership.