The unfolding of the insurance sector story during the Congress and BJP regimes, when they were in opposition and power, makes it difficult to judge the behaviour of political parties.
The BJP and Congress may be arch political rivals, but their decision echoes the same sentiment when they are in power and they take a similar stand when in opposition, especially when it comes to the insurance sector.
Before taking a look back, let’s tell you the context first. In her Budget speech this year, Finance Minister Nirmala Sitharaman announced an increase in FDI limit from 49% to 74% in the insurance sector.
Both parties have backed and opposed raising the FDI limit depending on whether they were in the opposition or the government. Therefore, when the government tables the Insurance Act, 2015 in Parliament for amendment, its debate will have strings attached to 1996.
In December 1996, then Finance Minister P Chidambaram had tabled the Insurance Regulatory Authority Bill. However, the bill was referred to the Standing Committee. During his 1997 Budget speech, Chidambaram had proposed to allow GIC (General Insurance Corporation) to float joint ventures.
While Left and BJP had opposed the bill citing apprehensions that multinationals firms would get access to Indian markets. Chidambaram had termed the apprehension of foreign insurance companies entering India as misplaced. He had said that there was no such proposal. The Bill was finally withdrawn with Chidambaram reacting sharply to it. He had said, “There is the Left which opposes any kind of opening to the private sector. There is the Congress which cautiously supports an opening. There is the BJP which supports an opening only to (the) Indian players…. With these three positions staring in my face, if I want to carry on the business of managing the finances of this country and reforming, I must come back to you again and again and try to convince you.”
In 1998, then Finance Minister in the Vajpayee government, Yashwant Sinha had tabled a Bill allowing FDI up to 26% in the insurance sector. The Bill lapsed as the NDA government fell in April 1999. Sinha had tabled the bill again in November 1999. The Vajpayee government also once considered raising the cap to 49% but the Congress strongly opposed the move.
And the same Congress when it was in power post-2004, expressed its plan to raise the FDI limit from 26 to 49%, facing stiff resistance from the BJP which was in opposition.
The Congress did not give away. It again tried to raise the FDI cap to 49% in 2008 and 2012 but failed to take the BJP on board on the issue. The plan, therefore, remained on the paper only.
With the Narendra Modi government coming to power in 2014, then Finance Minister Arun Jaitley came up with the bill to raise the FDI cap and the bill was referred to a Parliamentary select committee after opposition from the Congress.
So, the Modi government promulgated an ordinance in December 2014 to hike the FDI limit and introduced a Bill in March 2015 to replace the ordinance and got it passed despite objection from the Congress in Lok Sabha. Days after, the Rajya Sabha too passed the Bill with the support from the Congress and some other parties.
Cut to 2021, the BJP government has now proposed to raise the limit to 74% and the Congress has indicated its support with P Chidambaram calling the move inevitable.