The government has decided to push ahead with the long-awaited insurance bill by introducing it in the Rajya Sabha on Monday. While there is a slim chance of the bill being passed now, it will also not lapse as the Rajya Sabha does not get dissolved unlike the Lok Sabha.
The bill that will raise the FDI cap on insurance companies? capital from 26 to 49% can therefore be picked up by the new government that would be sworn-in May next year, without having to go through the entire process of Cabinet approval. It has taken a long time for the reform bill to come up in Parliament. It was in 2006, that the bill was referred to a group of ministers headed by Pranab Mukherjee.
Since the bill as originally conceived was a money bill that can only be introduced in the Lok Sabha, the government has split that bit. So the money bill component which entails increasing the paid-up capital of Life Insurance Corporation from Rs 5 crore to Rs 100 crore is being introduced as a separate bill in the Lok Sabha.
The Insurance (Amendment ) Bill, 2008 is likely to be sent to the parliamentary standing committee after its introduction. The decision to introduce the bills comes after Lok Sabha speaker Somnath Chatterjee decided to hold the Parliament session till December 23 despite reservations from Christian MPs who wanted the session to end this week itself as they wanted to go to their constituencies to celebrate Christmas.
Government managers confided that long-pending economic bills were likely to be pushed in these remaining days.
The Union Cabinet had approved the Insurance Bill, 2008 and the LIC (Amendment) Bill, 2008 in October this year, soon after the Left parties had withdrawn support to the UPA.
Apart from increasing the FDI in the sector, the 60-page bill also proposes nearly 120 changes to insurance laws, including amendments to the Insurance Act of 1999, the IRDA Act, 1938, and the General Insurance Business Act, 1972. Another key proposal in the bill aims to enable foreign reinsurance companies to enter the Indian market. This would help a host of firms such as Lloyd?s of London, Munich Re and Swiss Re to get a full branch status in India.
Meanwhile, the finance ministry is also planning to put out a draft of the Direct Tax Code by the month-end to elicit public opinion and views on it. The code, which aims to replace and simplify the Income Tax Act, 1961, however, will not be tabled in Parliament. ?The objective is to begin discussions on it and let the next government take a call on introducing it,? a finance ministry official said. The draft was given the go-ahead by former finance minister P Chidambaram who has also written a discussion paper on it.