With just nine sittings left in the Budget Session, the chances of getting key legislations passed seem to be fading. These legislations include Insurance Bill, Pension Bill, Land Acquisition Bill and Food Security Bill.
In fact the initial lists of business of Lok Sabha and Rajya Sabha for April 29 and April 30 have not mentioned any of these legislations. There will be no sitting on May 1 and after that the priority will be to get approval of Budget related legislations. It is learnt that the Government has entered into an arrangement with the Opposition to get the Budget related legislations approved.
Both houses of Parliament have not been able to transact business normally on the first four sittings during the post-recess part of Budget session which began on April 22.
The Opposition is agitated over JPC draft report on 2G and coal scam. There will be more trouble for the Government, if the Supreme Court gives any adverse remarks on April 30, when the CBI (Central Bureau of Investigation) Director’s affidavit and the new status report come up for consideration.
The one big issue the Government is facing now is fulfilling the assurances given to foreign investors. If the Prime Minister talked about efforts for consensus over Insurance Bill during his tour of Germany, then Finance Minister P. Chidambaram had said that raising foreign direct investment (FDI) cap in the insurance sector was on top of the agenda.
The Government had listed Insurance Bill in the first list of business of Rajya Sabha for April 23, but it was absent in the revised list of business. This Bill is pending since December 2008, when it was introduced in Rajya Sabha. This has made the Bill ‘immortal’ as it will never lapse irrespective of completion of Government’s term. However, the Bill can be withdrawn any time.
The Insurance Bill intends to raise the foreign equity cap to 49 per cent from 26 per cent besides other provisions. Interestingly, the Government has not used the term ‘Foreign Direct Investment’ either in the Bill or in the press statement issued after the Cabinet’s approval of official amendments in the Insurance Bill. Still, the Opposition and especially the BJP is against raising FDI in insurance sector.
Now, the Government has the option to issue an ordinance for the Insurance sector. This could either say the FDI limit is being raised to 49 per cent or it could give a composite limit of foreign equity cap where FDI will continue to be 26 per cent, but 23 per cent could be brought through Foreign Institutional Investment (FII).
However, for the composite limit, there are two problems. One, the FII route will be possible if companies are listed on the stock market and none of the insurance company is listed. Secondly, FII money will not come to the company’s balance sheet, but to the shareholders.
One may argue that a few insurance companies are planning to enter stock market, but that is not going to happen immediately.
The fate of the pension Bill depends on the insurance Bill, as this Bill has also been facing opposition.
The Cabinet decision related with official amendments to the Bill clearly says, “The foreign investment ceiling in the pension sector at 26 per cent or such percentage as may be approved for the insurance sector, whichever is higher may be incorporated in the present legislation.”
Despite the chaos, the Government may try to get key economic legislations approved on the floor without any debate. It has happened in the past.
Meanwhile, there is possibility of bringing the Companies Bill in the Rajya Sabha next week.
The Bill has already been approved by the Lok Sabha. Since most of the political parties are on board for this Bill, there should not be any problem. Still there will be question on the fate of the bill keeping in mind frequent adjournments.
Lastly, there is still no word on the direct taxes code. Chidambaram had earlier said that he will try to bring this Bill at the end of the session. However, the Cabinet is yet to approve official amendments to this Bill.