Foreign direct investment (FDI) cap in insurance to be raised to 49 percent
The much-awaited comprehensive insurance bill, which seeks to raise foreign direct investment cap in private sector to 49% from 26%, is to be introduced in the Parliament.
In october 2008, a Group of Ministers headed by External Affairs Minister Pranab Mukherjee had cleared a proposal to hike FDI limit from 26% to 49%.
The UPA regime had proposed raising the FDI cap in its first budget in 2004-05. However, opposition from the Left parties forced the government to refer it to GoM in 2006-end.The government failed to pursue the insurance sector reforms because of the pressure from Left, which were its allies.
However after withdrawal of support by the Left, the government took a conscious view to pursue the pending economic reforms, including those in the insurance sector.
“The Union Cabinet gave its approval for introduction of the Insurance (Amendment) Bill, 2008 for amendment to Insurance Act 1938, General Insurance Business Act, 1972, and Insurance Regulatory and Development Act, 1999, in the Rajya Sabha on the basis of recommendations made by GoM,” Finance Minister P Chidambaram told reporters on 31st October 2008.
The amendments, he said, will remove archaic and redundant provisions in the legislations and would incorporate certain provisions to provide IRDA with flexibility to discharge its functions effectively and efficiently.
However, the Bill is unlikely to be passed by forthcoming session of Parliament, due to lack of time, Finance Minister P Chidambaram added.
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