Govt introduces insurance sector reforms bills in Parliament

NEW DELHI: Unfazed by stiff resistance from the Left, Government on Monday introduced two insurance reforms bills in Parliament aimed at hiking foreign investment cap to 49 per cent and raising the capital base of state-owned Life Insurance Corporation.

The UPA government, which had kept insurance reforms in cold storage for almost four years in view of strong opposition from its erstwhile Left supporters, introduced the Insurance Laws (Amendment) Bill, 2008 in the Rajya Sabha after a high drama. Through this bill, the foreign direct investment in the private sector can be raised to 49 per cent from 26 per cent.

The Life Insurance Corporation (Amendment) Bill was introduced in the Lok Sabha after an unsuccessful attempt by the Left parties to stall it by division of votes. The Bill seeks to raise the capital of LIC from Rs five crore to Rs 100 crore.

In the Rajya Sabha, as Minister of State for Finance P K Bansal rose to introduce the bill, CPI(M) member T K Rangarajan dashed towards him to snatch the papers from him.

An agitated External Affairs Minister Pranab Mukherjee pushed the CPI(M) member to protect his colleague while another minister Meira Kumar provided a shield to Bansal.

Although UPA had unveiled plan to raise the FDI cap in the insurance sector in July 2004, it could not move on the issue because of opposition from Left which supported its government till July this year.

The government had referred the insurance sector reforms to the Group of Ministers which gave a go-ahead only after UPA parted ways with the Left combine.

Once its capital base is increased, LIC would be complying with the norms of the regulator IRDA.