The Bharatiya Janata Party (BJP) will consider raising the cap on foreign investment in the insurance sector from the current level of 26 per cent if it comes to power after elections due by May, a senior party leader said on Sunday.
Opening up over $45 billion insurance business to greater foreign participation is key to reviving investment in the economy, and the ruling Congress government has repeatedly sought parliament’s approval to raise the limit to 49 per cent.
Arun Jaitley, leader of the BJP in the upper house of parliament, told a television channel that his party had discussed with Congress leaders ways to break the deadlock over the insurance legislation.
“We have worked out various alternatives. Unfortunately, this has (been) too close to the elections,” Jaitley told CNN-IBN in an interview broadcast on Sunday.
The UPA government’s attempts to liberalise the insurance sector were repeatedly blocked by resistance from within its coalition as well as from the Opposition.
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Tens of thousands of employees at India’s state-controlled insurance companies and their communist party backers are strongly opposed to foreign involvement in the insurance sector, saying it would give them control over domestic savings and was against the national interest.
But Jaitley said his party would be look at the measure as a way to revive investment in an economy that grew just 4.7 per cent last year — its slowest in a decade.
“It is a proposal on the drawing board,” he said when asked whether the party will raise the FDI limit to 49 per cent if it comes to power.
The general election is expected to be called for April or May this year.
BJP’s prime ministerial candidate Narendra Modi is campaigning on a platform of strong government and reforms to put Asia’s third largest economy back on track and provide jobs to millions of disaffected youth entering the workforce each month.
Jaitley, however, said his party remained opposed to foreign direct investment in the retail sector, seen as threat to millions of grocery stores and traders who form a pillar of party support.
“As far as FDI in retail is concerned, the BJP has genuine concerns against this, and I do not think it is quite likely that policy is going to be changed.”
Modi, earlier this week, said small retailers must learn to work with large modern stores and online companies, suggesting a softening of stand on the party’s opposition to big players in the retail sector.