Millennium Post

Govt wants foreign hand to pick insurance pie

Govt wants foreign hand to pick insurance pie
After kicking up a political storm by introducing 51 per cent foreign direct investment [FDI] in multi-brand retail, the union cabinet has now sought to introduce another set of economic reforms. On Thursday, it cleared the proposal to increase FDI in pension and insurance sectors. It also cleared a revised draft of the companies bill and the competition bill, which will now go to Parliament for approval. If these decisions are approved, the insurance sector will have an FDI cap of 49 per cent with the possibility of the pension sector also taking the same limit.

The opposition immediately criticised the government for approving these decisions. Leading the attack, the West Bengal chief minister Mamata Banerjee wrote on Facebook page that the government had decided to sell the country. Similar reactions came from the Samajwadi Party and the Left. The Bharatiya Janata Party, however, seems to be buying time to offer a more nuanced critique, as it had also proposed a 49 per cent cap in the insurance sector during tenure of the the National Democratic Alliance government.

After these decision were made by the cabinet, the finance minister P Chidambaram addressed the media. He said, 'The foreign equity limit in pension sector will follow the insurance sector. If in the insurance sector the cap is 49 per cent, then in pension too the cap will be 49 per cent.' The pension bill cleared by the cabinet on Thursday allows for the private companies to manage pension funds.

The union cabinet also okayed the Companies Bill, 2011. The changes in this bill aim at improving the state of corporate governance, increasing levels of transparency and also to make independent directors more accountable.

In other major decisions, the cabinet cleared the 12th Five Year Plan and upgraded five airports – Tiruchirapalli, Coimbatore, Mangalore, Lucknow and Varanasi – to the international level. Explaining the rationale behind the airport upgrade, Chidambaram said, 'These airports already have infrastructure, like immigration and customs, to handle the international operations. In fact, some of them already handle some international flights. With this [decision] we expect that these airports will be able to attract more international flights and travellers.'
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