Govt, Congress truce likely on Insurance Bill

The Insurance Bill is set to be passed in the ongoing Winter Session of Parliament with a Select Committee report expected to be tabled on December 12.

Unlike the BJP, which had opposed quite a few reform Bills while in Opposition, the Congress has been supportive of reforms, helping the Government clear key Bills, including the labour reforms Bill. The party has been saying that it will be a constructive opposition unlike the BJP.

After the Select Committee meeting on the Insurance Bill, the Congress has indicated that it will study the explanation offered by the Government on the issue of allowing the FII route to be used for foreign investment in the sector, sources privy to the development said.

According to the Government, the FII route was adopted as a “safeguard” against the possible increase in the prescribed 49 per cent FDI limit in insurance.

The panel, headed by BJP leader Chandan Mitra, is likely to unanimously suggest two or three amendments to the present Bill, including enhancing the minimum capital for health insurance companies from ₹50 crore to ₹100 crore.

Another suggestion is that fresh shares should be issued during the sale of shares of Indian companies to a foreign owner so that FDI helps in capital enhancement as well.

“When IPOs are issued, foreign investors have a chance to buy as many shares as they want through the FII route. Limiting it to 49 per cent will help genuine investors,” said a panel member. The Congress demanded that the definition of investors should be strictly based on the FDI policy of the government. The Centre is likely to accept this suggestion, while other Opposition members argued that the definition of ‘investor’ should be part of the legislation.

The select committee has been given an extension till December 12. The committee will meet almost every day so that it can submit the report within the new deadline.

So far, the panel has completed discussions on 48 clauses of the Bill. The draft report will be ready this week.

“Once the report is presented with an amended Bill, it will be easy for the Centre to ensure its passage in this session,” another member said.

However, Opposition parties such as the Trinamool Congress have continued to raise objections.

TMC member Derek O’Brien walked out of Tuesday’s meetings, while other members argued that domestic mobilisation of capital is an option. They said allowing FDI in the sector has not helped the penetration of insurance.