New doubts about FDI cap increase in India

New doubts about FDI cap increase in India

The winter session of the Indian parliament begins today, but the select committee formed at the end of the last parliamentary session to consider the Insurance Bill has asked for more time from the finance ministry before submitting its report.

The Chandan Mitra headed committee was created after the ruling BJP-led coalition was unable to get the bill through the Upper House, the Rajya Sabha. Senior insurance officials in the Indian sector who were at Monte Carlo Rendez-Vous were convinced that the bill would be passed in this session, but there now appears to be a threat that procrastination by the committee will lead to a delay in the report being submitted.

The committee had been told to hand over its report on the last day of the first working week of the Winter Session – that is, November 28. But reports have emerged that various procedural points were being raised that could case that deadline to be missed. Two of the members had recently been appointed ministers. Two recent scheduled meetings of the committee had not taken place, although six meetings with various parties have convened.

Finance Minister Arun Jaitley has said that he will approach opposition parties himself in an attempt to get them on board, but observers noted that, unless Congress Party wanted the bill to pass, it appeared to have a sufficient number of weapons in its armoury to block it.

Worse for the BJP majority, more minority parties appear to be uniting in their opposition to the bill. Other matters appear to be becoming linked to the Insurance Bill, something which the BJP had steadfastly tried to avoid. Religion-based "hate speeches" and their legality, the land acquisition bill, and "black money" have all been matters raised by minority parties with a view on economic matters as well.

The main proposed change in the Insurance Bill is the raising of foreign direct investment caps in the sector to 49% from 26% – one which both the leader of the ruling coalition the BJP and the leading party of the opposition, Congress, have both supported and opposed, depending on whether or not they were in power at the time.

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