Insurance Bill sent to select committee

New Delhi: The Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA), which came to power with a landslide victory in the Lok Sabha elections, received the first setback to its legislative and economic reforms agenda when the opposition, on Thursday in the Rajya Sabha, blocked a Bill aimed at liberalizing the insurance sector.

The Insurance Laws (Amendment) Bill, 2008, which proposes to raise the cap on foreign direct investment (FDI) in insurance joint ventures from 26% to 49%, was referred to a Parliamentary select committee for further scrutiny. The 15-member select committee will submit its report, which is binding on the government, on the last day of the first week of the next session of Parliament.

The passage of the Bill, a government priority, was considered a test of the government’s ability to muster political support in the Upper House, where it does not have a majority.

According to a motion moved by finance minister Arun Jaitley, the select committee will have 15 members: Chandan Mitra, Mukhtar Abbas Naqvi, Jagat Prakash Nadda (BJP), Anand Sharma, B.K. Hariprasad, Jesudasu Seelam (Congress), Satish Chandra Misra (Bahujan Samaj Party), K.C. Tyagi (Janata Dal-United), Derek O’Brien (Trinamool Congress), V. Maitreyan (All India Anna Dravida Munnetra Kazhagam), Ram Gopal Yadav (Samajwadi Party), P. Rajeev (Communist Party of India-Marxist), Kalpataru Das (Biju Janata Dal), Naresh Gujral (Shiromani Akali Dal), and Rajeev Chandrasekhar (independent).

According to a senior minister in the government, Mitra will head the panel.

Although it had introduced the Bill in the Rajya Sabha in 2008, the Congress, the largest party in the Upper House, was adamant that it be referred to a select committee, arguing that some of the amendments are fresh and need to be studied further. At least 11 parties backed the Congress, which wanted clarifications on Indian ownership and control of insurance companies once the proposed amendments are in place.

With the select committee given time till the winter session to submit its report, the Bill will get the approval of the House once the government accepts any changes suggested by the panel.

BJP leaders blamed the Congress for delaying the reform Bill, saying the party did not want Prime Minister Narendra Modi to take credit for the passage of the long-pending legislation before his visit to the US in September.

Though the government had listed the Bill in the Rajya Sabha and shared the amendments with members, it was deferred and, strategically, not listed, as government MPs continued consultations with various parties for support. In an attempt to gain support, the government made it clear that it is open to amendments in the Bill. However, it could not get the backing to push through the changes.

With the Bill already pending before the Rajya Sabha, the government had to take it up in the Upper House. Rajya Sabha being a continuous body not subject to dissolution, a Bill introduced in that house does not lapse if it is not passed.

The motion to refer it to the select committee was placed on a supplementary list on Thursday, the last day of the over-one-month-long budget session.

Anish Thacker, tax partner (financial services), at consultancy EY, said the life insurance industry, in particular, has been looking forward to the proposed FDI increase. “One hopes that the Parliamentary select committee comes up with its suggestions soon, followed by the speedy passage of the amended Bill in Parliament, which the industry would definitely appreciate greatly,” he added.