Senior BJP leader Yashwant Sinha, who first moved a proposal in 1999 to allow foreign direct investment of 49 per cent in the insurance sector when he was finance minister in the last NDA government, has termed the Congress party’s opposition to the move as mere political posturing.
Speaking to The Indian Express, Sinha, who is in Jharkhand for the assembly polls due later this year, said that when he had proposed a 49 per cent FDI cap in the sector then, it had met with similar opposition from the Congress, as a result of which, the limit was brought down to 26 per cent. “Then after coming to power they came back with the proposal of 49 per cent. Now that the same proposal has been given by the BJP, they are opposing it,” he said.
Interestingly, in 2011, Sinha, as the head of the parliamentary standing committee on finance, had advised the Congress-led UPA government against hiking the foreign direct investment (FDI) cap in the insurance sector beyond 26 per cent. When asked about senior Congress leader Anand Sharma’s argument regarding the ‘composite cap involving hot money’, Sinha said, “Billions of dollars have been invested by FIIs in the stock market. Mr Sharma did not bother about it then. Now he has a problem with the hot money coming in the insurance sector!” According to the government’s proposal, the 49 per cent is a composite cap entailing both FDI and portfolio investments.
Earlier, Sharma, who is the deputy leader of the Congress in the Rajya Sabha, had said, “FDI stays with the company for creation of the capital. Foreign institutional investors (FIIs) may not. FIIs can move out. That is the difference between what we had brought in and we they are doing.”
Elaborating on his stance, Sinha said by allowing both FDI and FII, “You are giving them (investors) a choice … I think the composite cap of 49 per cent is okay.” The insurance sector was opened up for private sector in the year 2000, after the enactment of the Insurance Regulatory and Development Authority Act, 1999.