The UPA II government, which on Tuesday reiterated its plan to raise the foreign direct investment (FDI) cap for insurance sector despite many failed attempts in the past and nay-saying by the parliamentary standing committee, is determined to give it another try in the monsoon session next month.

The Insurance Laws (Amendment) Bill, pending in Parliament, proposes to increase FDI cap in the sector from 26% to 49%.

While economists and policy watchers said it will be difficult for the UPA to push through the Bill in the monsoon session, after a failed attempt in the budget session, the government sounds upbeat. ?The finance minister has said that the Bill should be passed in either of the next two sessions. We would like it to be passed in the upcoming session itself. If the political will is shown, all it needs is an hour of discussion to take it through,? Rajiv Takru, secretary, department of Financial Affairs, told FE. Takru added that reservations of the standing committee on the FDI cap issue notwithstanding, it should not be difficult for the bill to be tabled in the monsoon session.

According to people conversant with parliamentary matters, for the Bill to be passed in Parliament, the numbers right now look a bit bleak for the ruling coalition. To be sure, the UPA, with 206 seats in Lok Sabha, would look for support from Mulayam Singh’s SP (22 seats), Mayawati’s BSP (21 seats) and Laloo Prasad Yadav’s RJD (10 seats). That would be easier said than done, as SP and BSP have voiced their opposition to increasing the cap in insurance. However, it could possibly now count support from Nitish Kumar’s JDU, recently estranged from BJP and with 20 seats in Lok Sabha.

?It will need a lot of political maneuvering on the part of the Congress, as these parties (SP, BSP) are not known to be in favour of the reform,? political analyst Amulya Ganguli said.

Experts argue that the sector, which is burdened with losses, urgently needs long-term capital for expansion and increasing penetration, in an environment where Indian companies are finding it difficult to raise financing from domestic markets. They also agree that the chances of the Bill getting passed in the monsoon session would be very difficult.

?Given the current political situation, not just insurance, but any Bill at this moment may find it difficult to be passed. My guess is that in the monsoon session, the government would focus on other important and more politically charged legislations like the food security ordinance. As an economist I would prefer the insurance bill gets passed this session, but it is highly unlikely,? Professor NR Bhanumurthy of the National Institute of Public Finance and Policy told FE.

Monish Shah, a senior director with Deloitte, said that while this increase in cap is needed and should have been done long ago, he would not hazard a guess on if it could be passed this session, given the uncertainty over a working parliament session.?This has been in the offing for a very long time. This is what the industry is asking for as it will give the sector additional sources of capital.?