The plan to revitalise the insurance and pension sectors by increasing Foreign Direct Investment (FDI) limit is set to hit another roadblock.
The principal Opposition, Bhartiya Janata Party, has made it clear that it will not support any Bill that proposes more than 26 per cent FDI limit.
With the Prime Minister taking over the Finance portfolio, it is widely expected that the Cabinet will expedite taking up the proposal for revising FDI limit soon.
It is believed that the Finance Ministry has already sent the revised draft of these two Bills for the Cabinet’s consideration.
However, a senior BJP leader told Business Line , “Our thinking is clear. There should be a standard 26 per cent FDI limit for the financial sector. If the Government brings any Bill proposing to raise the limit to 49 per cent, we will not support it.”
This statement assumes significance as the Government on its own cannot get these Bills passed in Parliament without support from the BJP.
The Government, on various occasions, has said that it does not have the required numbers for getting these Bills passed.
The Insurance Bill, tabled in 2008, talked about raising the FDI limit.
Although the Standing Committee on Finance, headed by the BJP leader, Mr Yashwant Sinha, recommended against raising the FDI limit, this was not accepted by the Government while finalising the Bill. However, the Cabinet, in its meeting on May 11, had deferred its decision on the Bill.
Similarly, there is no mention of FDI limit in the pension Bill and the Government said that it can be done by rules and not by laws. The Government also said that the limit here would be similar to insurance Bills.
This means if the limit is raised in insurance sector, it will have the same bearing on the pension sector.
The Standing Committee had also recommended that provision for FDI should be part of the Bill. It is not clear whether this provision had been incorporated in the Bill brought before the Cabinet on June 7.