Lok Sabha on Monday passed the Insurance (Amendment) Bill, 2021, which seeks to raise the limit of Foreign Direct Investment in the insurance sector from the existing 49 per cent to 74 per cent.
The Bill was passed by the Rajya Sabha on March 17.
Finance Minister Nirmala Sitharaman said that the Centre has come up with this Bill only after “due consultations”. She said, “Some of the honourable members were observing with a bit of anxiety that we are rushing through it; that we are bulldozing. There is none of that…
“The consultations which the IRDAI has done included 60 insurers, a number of promoters, leading industry chambers, all of whom suggested that we need to increase it. So, it is only after due consultations that we have come up with this Bill,” she said.
Earlier, during the discussion on the Bill, Congress members opposed the amendment, saying that the implications of the Bill would be akin to a “new form of colonialism”.
Congress MP Manish Tewari said the move to raise the FDI cap to 74 per cent was a way to “try and fill the large hole” in the Union government’s finances.
Citing the history of opening up of the insurance sector to FDI, Tewari quoted former Prime Minister Atal Bihari Vajpayee in 2004 to say that the BJP had also stalled subsequent moves by the UPA government to raise the FDI limit from 26 per cent to 49 per cent multiple times. “But interestingly, soon after the BJP came to power in 2014, it raised the cap from 26 per cent to 49 per cent through an ordinance,” he said. The Congress leader said that the party opposed the Bill this time because it was not a matter of what to open up (to FDI) but how much to open up. “In 2008 India came out of that (global economic) crisis unscathed primarily because our insurance sector was still substantially nationalised, our banking sector was substantially nationalised and we had a powerful public sector in this country,” he said.
Urging the government to reconsider raising the FDI limit, Shiv Sena member Rahul Ramesh Shewale said the government should boost the state-owned insurance companies by infusing capital and strengthening the solvency of these companies to enable them to cater to the insurance needs of Indians, thereby not “allowing the reincarnation of East India Company on the Indian soil”.
Supporting the Bill, YSRCP member Magunta Sreenivasulu Reddy said it will boost competition, enable consolidation, and increase insurance penetration, leading to more innovative and affordable products for the end-consumer.
Opposing the Bill, BSP member Shyam Singh Yadav said that the decision to allow FDI in the insurance sector will be detrimental. He alleged that the foreign companies will take money out from India, a sentiment echoed by SP member S T Hasan.
Allaying members’ apprehensions, the Finance Minister said, “Koi hamara paisa bahar le ke nahin jayega. Hamare insurance ka paisa hamare yahan hi rahega (Nobody is going to take our money. Our money will remain here only).”
The House rejected an amendment moved by Congress member Jasbir Singh Gill and passed the Bill by voice vote.
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