Insurance companies have a low level of penetration in the country for want of capital, with life insurance at below four percent of the GDP and general insurance at less than one percent."
New Delhi, Aug 4 - The insurance bill's consideration by the Rajya Sabha has been deferred after a meeting called to resolve differences failed to achieve a breakthrough and several opposition parties insisted the legislation be sent to a select committee while the government sought its passage in this session only.
Informed sources said that the government was talking to various political parties to rally adequate support before moving the bill in the 243-member upper house where it has only 59 members.
The Biju Janata Dal (BJD) and Nationalist Congress Party are among those that have come in support of the draft legislation.
The government was likely to bring the bill in a day or two after another round of meeting with parties opposing the bill.
Parliamentary Affairs Minister M. Venkaiah Naidu had convened a meeting with leaders of parties in the Rajya Sabha to sort out the differences over the bill.
The government sought to allay apprehensions of the Congress and other opposition parties and expressed willingness to accommodate their suggestions. It also said that the bill was virtually the same as the bill prepared during the previous United Progressive Alliance government.
Sources said that Naidu asked Congress and other parties come out with their suggestions which can be discussed at another meeting in the next one or two days.
The sources said that Finance Minister Arun Jaitley urged the opposition parties not to play politics on the issue of economic reforms and either cooperate in the bill's passage or oppose it outright.
The Congress is backing the Trinamool Congress and Left parties' proposal to send the Insurance Laws (Amendment) Bill to a select committee, which would scuttle any government move to get the legislation passed by convening a joint session of the two houses of parliament.
However with another round of discussions expected between the government and the opposition, the probability of a joint session being convened appears to have receded.
The Congress justified its decision, saying that the amendments moved by the National Democratic Alliance government mark substantive changes from the original bill that was introduced by the first UPA government in 2008.
After the meeting, Naidu said the government was talking to various parties and was keen to push the bill.
The BJP-led government is apparently not keen to send the bill, seen a economic reform push by the Narendra Modi government, to select committee as such a move will delay its passage.
The upper house members sought time to study the proposed changes that include increase in the foreign investment limit for the sector to 49 percent from the current 26 percent in the bill, approved by the cabinet last month.
Naidu appealed to opposition parties Sunday to cooperate in the successful passage of the bill, saying it seeks to enable much desired capital inflows into the insurance sector.
Insurance companies have a low level of penetration in the country for want of capital, with life insurance at below four percent of the GDP and general insurance at less than one percent.
The amendment is expected to bring in much needed additional equity to the tune of Rs.25,000 crore to the sector.While up to 26 percent foreign investment will be allowed automatically, any FDI beyond that will require approval through the Foreign Investment Promotion Board (FIPB). Control of the insurance venture will have to remain in Indian hands.