Cabinet defers insurance bill decision

The Union Cabinet today deferred a decision on the much awaited insurance bill that aims at raising the foreign direct investment cap in insurance companies from 26% to 49% as Finance Minister P Chidambaram was not at the meeting.

The Insurance Laws (Amendment) Bill is expected to be tabled in the Parliament session that begins on Friday. The Bill also seeks to allow promoters to hold majority stake in insurance companies and permit public sector general insurance companies to raise capital from the market to finance their expansion. Insurance companies have been pushing for a relaxation of the foreign investment limit as they are governed by stringent solvency margin norms and continuously need capital infusion to support business growth. The reforms, planned by the government long time back, were put on the backburner after the Left parties who were giving outside support to the UPA government was strongly opposing to it. The Bill is likely to be taken up by the Cabinet soon.

Briefing the media after a meeting of the Cabinet and the Cabinet Committee of Economic Affairs (CCEA), Sibal said the CCEA approved the creation of institutional infrastructure for hospitality and tourism education. The approval would entail strengthening of existing hotel management and food craft institutes and reasult in the creation of 19 new hotel management centres and 25 food craft institutes during the Eleventh Plan.

The CCEA also approved an incentive bonus of Rs 50 per quintal on paddy over and above the minimum support price (MSP) by the government for the entire kharif marketing season. The decision will effectively increase the support price of paddy procured for the central pool to Rs 900 per quintal and partially address the concerns of farmer organisations that were demanding a hike on MSP on paddy.