NEW DELHI Aug 14 Plans by India's new
government to open the insurance sector to more foreign
investment suffered a setback on Thursday after the opposition
blocked the legislation in the upper house.
The landmark bill to liberalise the insurance industry,
which marks Prime Minister Narendra Modi's first stab at
legislative reforms, will now go to a parliamentary committee,
which will submit a report later this year.
The bill prrposes to increase the limit on foreign
investment in insurance ventures to 49 percent from the current
Modi took office in May vowing to restore economic momentum
and end years of policy paralysis, but the Congress-led
opposition which has a majority in the upper house of parliament
demanded that a parliamentary panel examine the bill, saying
there was no hurry to approve the measure in the current session
which ends on Thursday.
"The government wanted to hurriedly pass FDI in Insurance,
I'm happy that its now gone to a select committee," Derek
O'Brien, a lawmaker from a left-leaning regional party.
Modi's government expects that if the sector is opened
further, insurers such as Canada's Sun Life Financial
Inc, Prudential PLC Nippon Life Insurance Co,
Italy's Generali and Dutch insurer Aegon NV will
inject more funds into what is the world's 10th biggest life
insurance market - even though currently fewer than 4 percent of
Indians have insurance.
Modi hopes such a step would help improve investor
confidence in the broader economy sapped by years of policy
neglect and dithering.
The Bharatiya Janata Party-led government has a majority in
the lower house of parliament after the election in May and
should face few problems in getting the bill cleared in that
India's two main parties - the BJP and the Congress - remain
bitter opponents even after the electoral battle, seeking to
deny the other any political advantage.
When in opposition, both parties have sought to whip up
resistance to liberalising sectors of the economy such as
insurance and defence, and to labour reforms. Such steps are
considered vital to reviving growth that last year fell to 4.7
percent, the slowest pace in a decade.
While the move to change ownership rules in the insurance
business has suffered a delay, the government succeeded in
pushing through other legislation including greater oversight on
appointments of judges.
It introduced 13 new bills in the current session, of which
four have been passed. One bill was withdrawn, leaving in effect
68 bills pending, the PRS Legislative Research said in a note.
Among the bills introduced was a first step at labour
reforms, including allowing women to work night shifts and
easing rules for hiring apprentices. The bill will be taken up
for debate in the next session.
The previous government's efforts to move any kind of
business in parliament were blocked by disruptions.
(Reporting by Nigam Prusty and Manoj Kumar; Writing by Sanjeev
Miglani; Editing by Kim Coghill)