The Rs 2,500-crore infusion into state-run insurance companies is aimed at helping them improve the solvency ratio.
Net foreign direct investment (FDI) in India rose 23% to $20.9 billion in the first half of the current fiscal, compared with $17 billion in the year-ago period, finance minister Nirmala Sitharaman told the Lok Sabha on Wednesday.
Responding to the debate in the lower House on the first supplementary demand for grants for FY20, Sitharaman said the investment scenario was not as bad as it was being made out. The Lok Sabha approved the government’s proposal for gross additional expenditure of Rs 21,246 crore, including Rs 2,500 crore for capital infusion into state-owned insurance companies.
Net cash outgo from the new proposals aggregate to Rs 18,996 crore, as the balance extra spending is matched by savings and extra receipts. Besides, Rs 4,557 crore would be infused into IDBI Bank via off-Budget means. The Department of Financial Services will get an additional Rs 4,557 crore for infusion into IDBI Bank through recap bonds.
In September, the Cabinet had cleared a proposal under which IDBI Bank was to get Rs 4,557 crore from the government, which has 47.11% stake in the bank. State-owned LIC, which is the promoter of the ailing lender with a 51% stake, was to pump in an additional Rs 4,743 crore to improve the bank’s capital position. The Rs 2,500-crore infusion into state-run insurance companies is aimed at helping them improve the solvency ratio. The additional expenditure proposed is unlikely to increase the Centre’s Budget size as the likely huge shortfall in tax revenues could be balanced with spending compression under other heads.