The Tamil Nadu Government has expressed its disapproval to the Centre allowing foreign direct investment in insurance and pension funds sectors.
Chief Minister J. Jayalalithaa said in a press release: “I strongly oppose these moves as they are detrimental to the future of the common people of this country.”
The UPA Government at the Centre is “unfazed by the sufferings of the common people, small traders and small farmers''.
The Cabinet’s approval “toting these as big-ticket reforms, which would accelerate unprecedented growth and boost a sagging economy, is premature''.
FDI in insurance, pension funds
Increasing FDI from 26 per cent to 49 per cent in the insurance sector and allowing 26 per cent FDI in pension funds sector will happen only after the Pension Fund Regulatory & Development Authority (PFRDA) Bill, 2011, and Insurance Law (Amendment) Bill, 2008, are passed by both the Houses of Parliament. The UPA faces a “number crunch” in the Houses, she said.
Though 26 per cent FDI was permitted in insurance sector “nothing appreciable” came of it. Hiking this to 49 per cent despite a Parliamentary Committee recommendation against it will prove disastrous.
“As to whether they have the right to jeopardise this crucial sector is a debatable issue,” Jayalalithaa said.
Limiting insurance companies’ capital requirement to Rs 50 crore will result in the mushrooming of small companies lacking experience and capability and will be fraught with danger. This will unnecessarily expose our public to risk.
Public sector cos to be hit
FDI in insurance sector will see private insurance companies with totally commercial approach dominating. Public sector companies like LIC, which participate in the developmental process, will suffer and “the developmental process of the nation itself will be adversely and severely affected''.
FDI in pension funds and channelling the domestic savings of the elderly into the highly risky and unpredictable capital market will jeopardise the future of senior citizens.