Parliament on Thursday approved the NDA government's first major economic reform measure as the long-pending bill providing for raising foreign investment cap to 49 per cent in insurance was passed by Rajya Sabha after main opposition Congress and some other parties came on board.
The controversial Insurance Laws (Amendment) Bill , 2015, which replaced an ordinance promulgated in December last, was passed by voice vote after walkout by Trinamool Congress and DMK.
The smooth sailing of the bill in the Upper House, where the ruling NDA is in a minority, was possible with the help of opposition parties like Congress, AIADMK, NCP and BJD besides allies Shiv Sena and Akali Dal.
The bill was introduced this evening after a heated debate and adjournments over technicalities as a similar legislation was pending in the House.
The original bill, which was brought by Congress in 2008, was withdrawn and the new bill was passed after a debate of about two-and-a-half hours.
Trinamool Congress and Left parties strongly opposed the measure. While Trinamool, DMK as also SP, BSP and JD(U) staged a walkout, Left members moved amendments which were negated.
The bill, which was passed by Lok Sabha on March 4, provides for raising the foreign investment cap in insurance sector from 26 per cent 49 per cent and is expected to bring in funds to the thousands of crores.
The bill was introduced after Deputy Chairman P J Kurien ruled that the new legislation, as passed by the Lok Sabha, could be taken up as it was a "unique and unprecedented" situation.
Moving the bill for consideration and passage, Minister of State for Finance Jayant Sinha said the measure was necessary for expanding the penetration of insurance in the country which is very low at present.
He said the measure would help go beyond life insurance to cover other aspects of like health and crop besides providing more funds for development of infrastructure.
Seeking to allay apprehensions, Sinha said the premium will not flow out of the country but will remain within the country and the interests of policy holders will be protected by the IRDA.
The bill provides for imprisonment of up to 10 years for selling policies without registration with the regulator IRDA.
The legislation will also allow PSU general insurers to raise funds from the capital market and provides for increased penalty to deter multilevel marketing of insurance products.
He said more and more FDI is required in the sector to provide more coverage to people of India.
Sinha also sought to allay apprehensions that state-run LIC would be hurt if foreign companies come in, saying it was a very competitive body and match global players.
At the same time, he said the country needs not one, but five to 10 LICs.