The Hindu Business Line : Insurance Bill unlikely this session

New Delhi March 20 The prospects of introducing a Bill in the current Budget session of Parliament to increase the Foreign Direct Investment (FDI) limit in the insurance sector from 26 per cent to 49 per cent seems to be receding.

The Group of Ministers (GoM) under the External Affairs Minister, Mr Pranab Mukherjee, met with the Left party leaders here on Tuesday to thrash out a consensus on the matter.

A detailed power point presentation highlighting the benefits of hiking the current FDI limit apparently failed to impress the Left leaders, who included Mr Gurudas Dasgupta of CPI and Mr Basudev Achariya of CPI(M).

Those present from the Government side at the meeting included the Union Finance Minister, Mr P. Chidambaram, the Law Minister, Mr H.R. Bhardwaj; the Labour Minister, Mr Oscar Fernandes and the Deputy Chairman of the Planning Commission, Mr Montek Singh Ahluwalia.

"Our objections to raise FDI limit in insurance remain, and the Government has not put forward any new argument to help us change our view,'' Mr Dasgupta told Business Line.

He said the Government's argument to bring in more long-term capital does not hold true, as worldwide experience showed that international investors always take a short-term view of the market.

Mr Achariya said that the Government had failed to come up with any new point on the insurance sector. The Left parties contested the argument of the GoM that to raise that capital amendments in the Insurance Act were required, saying Indian companies were equally capable of raising that capital.

Besides raising the FDI cap, the proposed bill for comprehensive amendments to insurance laws include amendments in the Insurance Act of 1999, LIC Act, 1956, and IRDA Act, 1999, among others.

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