Rites of passage

The imbroglio over the passage of the Insurance Laws (Amendment) Bill, which enables raising foreign shareholding in Indian insurance companies from 26 to 49 per cent, highlights the opportunism of the country’s two main political parties. This Bill was originally introduced in December 2008 by the previous Congress-led government at the Centre. It couldn’t go through then mainly because of the main opposition, the Bharatiya Janata Party (BJP), refusing to play ball. The Bill was referred to a Parliamentary Standing Committee under the senior BJP leader Yashwant Sinha; the panel predictably opposed increasing the foreign ownership cap. Now, we have a new BJP-led government wanting to get the Bill passed, only to encounter opposition from the Congress, which is insisting it be referred to a select committee of the Rajya Sabha before being taken up for voting. And this time, it is the BJP — which, together with allies, has barely 60 members in a 243-member Upper House — that is being pushed to the wall.

That cynical obstructionist politics is behind the ongoing deadlock is clearly apparent as there is no major difference between the original Bill and the amended version awaiting passage. The Bill is ultimately about allowing up to 49 per cent foreign ownership in Indian insurance companies. The fact that the 49 per cent cap is now proposed to include foreign institutional investors’ stake — this wasn’t clear in the original version — is not a substantive change that warrants referral to a Rajya Sabha select committee. Any fresh amendment can be considered at the time of discussion and voting. Going through a select committee — especially after the Bill had already been examined by a standing committee comprising members of both Houses — would push its passage to the next winter session at the earliest.

The biggest casualty of this self-serving power play is India’s image as an investment destination. Insurance is a sector that desperately needs capital both for its own growth and as a vehicle for attracting long-term savings to fund India’s humongous infrastructure requirements. The unfortunate part is that both the Congress and the BJP recognise the need to push ahead with reforms and promote foreign investment. There is no ideological chasm here. The Left’s stance on the Bill has at least been consistent, even if its overall position on foreign direct investment is somewhat confused. The absence of an agreement between the BJP and the Congress on key issues relating to economic reform is going to cost the nation. The initiative must necessarily come from the ruling party to sort out this imbroglio. At the same time, the Congress needs to be reminded that its obstructionist tactics are unlikely to earn any political dividends for itself.

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