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Govt open to minor changes in insurance Bill

Possibility of a truce on the insurance amendment bill between the government and the Congress-led Opposition brightened today, and the prospect of a joint session of Parliament receded, when the Congress and other parties opposing the bill accepted the government’s suggestion to hold another meeting, either tomorrow or day after, to further discuss and resolve differences over the Bill.

The Insurance Laws (Amendment) Bill, 2008, was earlier listed to be tabled in the Upper House on Monday. But the government postponed tabling it and instead called an all party meeting after nine parties, including Congress, had written to Chairman of Rajya Sabha M Hamid Ansari on Friday that the Bill should be referred to a Select Committee of Parliament since it was no longer the ‘original’ Bill tabled in the Upper House but one that included several amendments.

At today’s meeting, Finance Minister Arun Jaitley reiterated the government’s position that the language and contents of the proposed Bill were that of the Bill the UPA government had tabled and no major new amendments were proposed.

Jaitley said most of the amendments suggested by the Standing Committee related to change of dates and numerals and were ‘inconsequential’. According to a government press statement, Jaitley said “the government is ready to consider whatever changes/formulation to be suggested by the Congress Party right away.”

Sources present at the meeting claimed that Jaitley asked the Congress to not play politics over the Bill, and accept or reject the Bill outright, indicating the government was unwilling to negotiate with the Congress on its support for the Bill, and might call a joint session if the Bill was defeated in Rajya Sabha.

The Bill is the NDA government’s first major economic reform. The BJP, along with National Democratic Alliance, is in woeful majority in Rajya Sabha and needs the support of opposition parties. Today, both Biju Janata Dal (BJD) and Congress-led United Progressive Alliance (UPA) ally Nationalist Congress Party (NCP) announced their support to the Bill.

Jaitley, Parliamentary Affairs Minister M Venkaiah Naidu and his junior minister Prakash Javadekar represented the government at the meeting. Jaitley and Naidu voiced concern over grossly inadequate insurance coverage to the people of the country. They said the insurance sector needed sufficient capital flows into insurance sector.

The BJP in its manifesto for 2014 Lok Sabha elections had promised farm insurance to take care of crop loss due to natural calamities as also introduce ‘National Health Assurance’ with the objective of universal healthcare. Sources said Prime Minister Narendra Modi?s debut speech from the ramparts of Red Fort on the Independence Day was likely to include his government’s commitment to provide health and crop insurance.

Naidu asked Congress and others to discuss among themselves and come out with their suggestions which can be discussed at another meeting in the next one or two days. This suggestion was accepted. He also asked the opposition to help pass the Bill in the current session since the government was willing to have a detailed discussion on the Bill in Rajya Sabha.

At the meeting, Congress leader Anand Sharma said his party wanted clarity on the implication of the proposed Bill, among other things, on the settled definition of ‘Foreign Direct Investment’ given the composite nature of% FDI proposed in the insurance sector, including Foreign Institutional Investment.

The Bill seeks to raise the FDI cap in insurance sector from 26 to 49%. Naidu said some Congress party members are of the view that some of the amendments have serious implications. “We told them identify what are those implications you are concerned and government will address them. They said they will discuss among themselves and again discuss with us. We will discuss it and I am confident that we will be able to evolve a broad consensus,” he said.

The Minister said the Left has taken a principled stand that that they are against FDI in any sector, which the government understands, but the Congress wanted FDI and it was they who had proposed it and that now both Congress and BJP were on the same wavelength on the issue. However, the BJP, despite efforts from then Finance Minister P Chidambaram, had remained non-committal about its support to the Bill then.

NCP’s Praful Patel said his party will support the Bill as it was a party to the decision when UPA tabled it. CPI(M) leader Sitaram Yechury said allowing Foreign Institutional Investors was a dangerous move. He said giving them access in insurance sector meant risking savings of millions of people, adding that the global meltdown started with an American insurance company.

The Congress has 69 MPs in Rajya Sabha, while the BJP has 42. Those opposing the Bill together have 133 MPs, while those in support are a measly 68 in the House, whose current strength is 242. The treasury benches would either need 122 to pass the Bill or hope that some opposition parties abstain so that the effective strength of the House gets lowered at the time of voting. Apart from Congress, others who still oppose are Trinamool and JD(U) 12-each, BSP 14, SP, 10, CPI-M 9, CPI 2, RJD 1 and DMK 4.

Among the supporters, apart from BJP are, its NDA partners TDP with 6-seats, Akali Dal and Shiv Sena three each and RPI (Athawale) one member. BJD with seven MPs and NCP with six have also vowed their support to the Bill. The NDA does hope to get support from 11 AIADMK members, some of the 10 nominated and nine independent members, and from other smaller parties, including Indian National Lok Dal, which together account for 12 MPs.

The Bill to amend the Insurance Act, 1938, the General Insurance Business (Nationalisation) Act, 1972 and the Insurance Regulatory and Development Authority Act, 1999 was introduced in RajyaSabha on 22 December, 2008. It was then referred to the Standing Committee on Finance for examination and report. The Standing Committee submitted its report to Parliament on 13 December, 2011.

There are a total of 111 clauses in the Insurance Laws (Amendment) Bill, 2008. The government has finalised 97 official amendments to the Bill, as approved by the Cabinet on 24 July 2014, with such drafting and consequential changes, if any, in consultation with the Legislative Department.

The major amendment relates to foreign equity cap raised to 49%, capital requirement for a health insurance company is now proposed at Rs 50 crore (instead of Rs 100 crore for General Insurance companies), public sector General Insurance Companies permitted to raise capital from the market, etc.

The enactment of the Bill will help remove some of the archaic and redundant provisions in the legislation, facilitate meeting of the capital requirements of the sector and provide IRDA enhanced flexibility and empowerment to discharge its functions more effectively.

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