Lok Sabha passes bill to hike FDI in insurance to 49%, now faces Rajya Sabha hurdle

By PTI
09 March, 2015

The controversial Insurance Bill, a key reform legislation, today cleared the Lok Sabha hurdle easily but the problem of numbers in Rajya Sabha prompted the government to say that it will convene Joint Session if it is defeated in the Upper House.

The Insurance Laws (Amendment) Bill, which provides for raising the foreign investment cap from 26 per cent to 49 per cent, was passed by the Lok Sabha after a short debate.

Minister of State for Finance Jayant Sinha, who piloted the Bill which has been pending since 2008, said the measure was crucial for the country as “our insurance penetration is low”.

The bill will now have to pass the test of Rajya Sabha where BJP and its allies do not have majority and the government is critically dependent on the support of the Congress.

The bill, seeking to replace an Ordinance on the subject, is likely to be taken up by Rajya Sabha after the Holi holidays ending Sunday.

Realising the uphill task that the government will face in Rajya Sabha, government talked about convening a joint session to get it passed.

“If Insurance Bill is defeated in Rajya Sabha… it will open an opportunity for a Joint Session of Parliament,” Jayant Sinha told reporters after the legislation was passed by Lok Sabha.

He hoped that Congress will support the bill in the Rajya Sabha. “We will have to see who supports it in the Rajya Sabha as BJP lacks numbers,” Sinha said.

However, Congress, which brought the original bill way back in 2008, was ambiguous on supporting the measure.

Congress spokesman Abhishek Singhvi said his party is not against the bill per se but “We are opposed to the methodology, style and manner in which it has been brought bypassing Parliament.”

He said his party was also against the fact that the government had changed the recommendations of the Select Committee which scrutinised the insurance bill.

At the same, Singhvi dismissed suggestion that the party had take a U-turn on the issue.

A senior Congress leader said in private that the best thing would be to keep the bill pending in the Rajya Sabha for long as its rejection could pave the way for a Joint Session.

For any measure to be brought in the Joint Session, it needs to be approved by one house and rejected by the other.

Though the bill cleared the Lok Sabha hurdle with ease, the government will face a tough task in getting it passed by the Rajya Sabha where it is in minority.

The insurance bill, introduced in Rajya Sabha in 2008, is already pending in that House. When it was introduced in Lok Sabha yesterday, Left and TMC members resisted, contending that the House has no legislative competence as similar bill is pending in the RS.

A bid to withdraw it from the Upper House last week was scuttled by opposition.

The Bill seeks to raise foreign investment limit in the sector from 26 per cent to 49 per cent. While up to 26 per cent will be under the automatic route, the remaining would be cleared through the FIPB.

“The proposed amendments are aimed at bringing about improvements and revisions in the laws relating to insurance business in India to remove archaic provisions and incorporate modern day practices emerging in a changing dynamic environment, which includes private participation,” says the Statement of Objects and Reasons of the Bill.

Under the new provisions, the Life Insurance Council and the General Insurance Council would act as self-regulating bodies for the sector.

Under the proposed law, an insurer will be prohibited from challenging the life insurance policy on any ground after a period of three years of selling it.

It also allows insurers to raise capital through new instruments and do away with the restrictions on divestment of stake by Indian promoters of the joint venture.

The Bill seeks to put a minimum capital requirement for health insurers at Rs 100 crore.

Lok Sabha passes Coal Bill

Lok Sabha today passed the Coal Mines bill to allow e-auction of coal blocks after the Supreme Court cancelled their allocation leading to uncertainty in the coal sector, amid opposition by Left and some other parties.

The Coal Mines (Special Provisions) Bill, 2015, would replace two ordinances issued by the government — the first on October 21 last year and the other in December, after the apex court cancelled the allocation of 204 blocks.

Replying to a debate on the bill, Coal and Power Minister Piyush Goyal said its passage would ensure “transparent and honest” process of auctioning of coal blocks.

Highlighting the necessity of passing the bill, he warned that if the Bill is not passed, then there could be a crisis in the coal sector with the closure of these mines.

Goyal maintained that all power plants had adequate coal reserves and the e-auction has ensured open bidding and no monopoly in the process.

The bill was passed by a voice vote after the House voted out amendments moved by opposition members. While some of the amendments were disapproved by voice vote, CPI(M) member Badruddoza Khan’s amendments were voted out after a division sought by him.

Earlier, the Minister asserted that adequate safeguards have been put in place to ensure the end-use restrictions and stop hoarding.

Goyal said not even a single coal block was auctioned during the UPA’s 10-year rule, and the NDA government has already started auctioning the blocks so that the country gets uninterrupted power supply.

“Even after so many years of independence, 30 crore people do not have access to electricity,” he said, adding that a technical copmmittee has decided on which block to be auctioned to which sector.

The Bill provides for allocation of coal mines and vesting of the right, title and interest in and over the land and mine infrastructure together with mining leases to successful bidders and allottes through a transparent bidding process.

The coal blocks are now being allocated in line with the provisions of the ordinances and rules made under them and the auction of these blocks were being carried out through an e-auction process to transparency of the process.


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Lok Sabha passes bill to hike FDI in insurance to 49%, now faces Rajya Sabha hurdle

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