The United Progressive Alliance (UPA) is making a fresh bid for foreign direct investment (FDI) in the pension sector. The Union cabinet on Tuesday gave the go-ahead for a 26% foreign stake in pension funds in what is undoubtedly a reformist move.
Still, it is not certain that Parliament will approve the plan. That is because the government has disregarded a parliamentary committee’s advice to legally cap FDI at 26%. The government clearly wants to retain the right to be able to raise the FDI limit at a later date.
Smart as the move may be, the arithmetic in Parliament is hardly in the UPA’s favour. It has but a slender majority in the Lok Sabha and is in a minority in the Rajya Sabha. The Left parties, whose opposition had stymied previous efforts, are bound to line up against the move. Political exigency may result in the Bharatiya Janata Party doing the same, throttling an otherwise good initiative.